Since mother’s day is falling on 10th of May, I thought I would discuss certain things which you can do for your mother to make this day special for her from financial perspective. Let us discuss what all you can do to help her.
As all the doctors advise you to go for an annual check of your full body if you are over 35 to ensure early symptoms of any impeding disease. For females it is more important specially to cover cancer check up as well for early detection of symptom and probability of Cervical, Endometrial, and Ovarian cancer. With early detection of a preventive course of actions can be taken before it becomes chronic. The expenses incurred by you for preventative health check up of both the parents taken together can be claimed upto Rs. 5,000/- under Section 80D of the Income Tax Act every year. You can claim these expenses even when your parents are financially independent. This deduction can be claimed by your mother as well as you both but not for the same expenditure.
With cost of medical treatments skyrocketing, it is important that your mother has adequate health insurance cover. If you are employed and your employer provides the facility to cover your parents, please cover your mother in that group health insurance policy because group health policies covers pre existing disease from inception without any medical check up. Please buy her a separate cover as well in addition to adding her in your employer provided health policy. For the separate cover you can claim upto Rs. 25000/- along with the health check of Rs. 5,000/- which is included in the above overall limit of Rs. 25,000/-. In case your parents are senior citizen, you can claim deduction upto Rs. 50,000/- for same under Section 80 D. In case your mother is a senior citizen and does not have health insurance policy, you can pay and claim deduction for regular medical expenses including hospitalisation and diagnosis expenses upto Rs. 50,000/- in a year.
Most of the people keep their savings in their saving bank account earning only around 3 % to 4%. Instead of keeping it in saving account same can be put in a liquid fund or overnight fund of a mutual fund house. Liquid fund/overnight funds provide better returns than saving account and better liquidity than fixed deposits. The average returns generated by liquid funds are generally around the same range that those earned on fixed deposits and that too with added advantage of liquidity as you can withdraw as much money as you want while the balance earns you the interest. There are certain liquids funds which provide you instant redemption facility upto Rs. 50,000/- or 90% of the value of your investments in the scheme. The money of instant redemption gets credited in your linked account within an hour. With the smart phone applications and online banking facility available in all the banks, your mother can invest/withdraw from liquid fund very conveniently without keeping huge balance in the saving bank account.
There is difference between saving and investment which many people are not able to appreciate. For them money kept in saving bank account is treated as investment though interest on it is not even sufficient enough to beat the inflation.
So you educate your mother about various options available for investment in addition to the traditional one like insurance policies, bank fixed deposits and gold jewellery. These traditional investments are not good and at the most are just able to help you beat the inflation in the long run but do not help your money work harder. You can pay subscription for some of the personal finance magazine or newspaper to help her understand the field of investment. Investment is not a rocket science and it is not necessary for one to have commerce background to understand the basics of investment. With the basic learning even if she is not able to take her own investments decisions, at least, she does not become victim of misselling of any of the toxic products which are sold to gullible people specially senior citizens. Even if you make her start watching personal finance programme on television, gradually she will be able to understand the nuances of personal finance.
On the Mothers day, you can get a financial plan prepared by a Financial Planner for your mother. There is no age for preparing a financial plan. So whatever be her age, you can hire services of a Registered Investment Advisor and get a financial road map made for her. This will make her financially aware about various investment options and the importance of laying out your financial road map for her future.
If your mother is comfortable sharing her investment details with you, you can help her take her investment decision. In case you are not able to decide about where to invest, you can avail services of an independent Registered Investment Advisor (RIA) to review her investment periodically while you be part of the discussion on her investment strategy. With interest rates having come down significantly from good old days, it is very important that her money earns decent returns to take care of her day today expenses without risking her principal amount. What a better day than the mother day to list our all her investments and review them to optimise the returns without compromising on safety of her money.
Now is the era of digital age. From getting your grocery to booking for movie tickets and booking a cab, everything is possible with the help of your phone. Even for paying the utility bill, you need not stand in the long queue. What you need is online banking facility which all the banks provide. Train and motivate your mother to do online transactions. Getting your mother to become conversant is very important for your mother as in most of the cases the grown up children do not stay with their parents and it is the parents who have to fend for themselves. If they have become conversant with online payments, various payment wallet etc, their life could become very comfortable. The importance of digital payments is getting manifested in the current lock down period.
Balwant Jain is a tax and investment expert and can be reached on email@example.com and on his twitter handle @jainbalwant