"I am 46 years old and earn 25 thousand per month. I have two sons - one son is in class 1 and one son is studying Chartered Accountant. I have a daughter studying in class 12. Please help me with my children. Explain the spending and saving plan for education, wedding expenses and my retirement with lifestyle planning and every calculation in Nepal."

 "I am 46 years old and earn 25 thousand per month. I have two sons - one son is in class 1 and one son is studying Chartered Accountant. I have a daughter studying in class 12. Please help me with my children. Explain the spending and saving plan for education, wedding expenses and my retirement with lifestyle planning and every calculation in Nepal."

Comprehensive Family Spending and Saving Plan in Nepal

Creating a detailed family spending and saving plan is essential for securing your children's education, marriage expenses, and your retirement, while also maintaining a comfortable lifestyle. Here is a comprehensive guide tailored for the Nepal context.

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1. Assess Your Current Financial Situation

• Age: 46 years
• Monthly Income: NPR 25,000
• Dependents: 3 children (Son 1 in Standard 1, Son 2 pursuing Chartered Accountancy, Daughter in Class 12)

2. Financial Goals

1. Children's Education:
   • Son 1 (Standard 1): Schooling and higher education
   • Son 2 (Chartered Accountant): Completion of CA
   • Daughter (Class 12): Undergraduate education
2. Marriage Expenses: Future marriage costs for all children
3. Retirement Fund: Comfortable retirement savings

3. Monthly Budget Allocation

Assumptions:

• Expenses include basic needs, education, healthcare, transportation, and savings.
• Prioritize children's education, marriage, and retirement savings.

A. Monthly Income Breakdown

1. Monthly Income: NPR 25,000
   • Fixed Expenses (e.g., housing, utilities, groceries): NPR 10,000
   • Education Expenses: NPR 5,000
   • Savings & Investments: NPR 7,000
   • Miscellaneous Expenses: NPR 3,000

B. Savings and Investments

1. Emergency Fund:

   • Goal: 6-12 months of expenses
   • Monthly Allocation: NPR 2,000
   • Recommended Accounts: Savings account in reputed banks like Nepal Investment Bank or Nabil Bank

2. Children’s Education Fund:

   • Son 1: NPR 1,500/month in diversified mutual funds
   • Son 2: NPR 1,000/month in balanced/hybrid funds
   • Daughter: NPR 1,500/month in large-cap equity funds
   • Recommended Mutual Funds:
     • Son 1: NIBL Sahabhagita Fund
     • Son 2: Laxmi Equity Fund
     • Daughter: Siddhartha Equity Oriented Scheme

3. Marriage Fund:

   • Monthly Allocation: NPR 2,000
   • Investment Options: Fixed deposits, PPF (Public Provident Fund)
   • Recommended Banks: Nabil Bank, Global IME Bank

4. Retirement Fund:

   • Monthly Allocation: NPR 2,000
   • Investment Options: Employee Provident Fund (EPF), NPS (National Pension System), mutual funds
   • Recommended Plans:
     • NIBL Pragati Fund
     • Employee Provident Fund contributions

4. Detailed Plan for Each Goal

A. Children's Education

Son 1 (Standard 1)

• Time Horizon: 15-20 years
• Goal: NPR 20 lakhs
• Investment: NIBL Sahabhagita Fund, starting with NPR 1,500/month
• Expected Growth: Assuming 12% annual return, the investment will grow significantly over 15-20 years.

Son 2 (Chartered Accountant)

• Time Horizon: 3-4 years
• Goal: NPR 5-10 lakhs for CA completion
• Investment: Laxmi Equity Fund, starting with NPR 1,000/month
• Expected Growth: Assuming 8-10% annual return, this will provide a decent corpus in 3-4 years.

Daughter (Class 12)

• Time Horizon: 3-5 years
• Goal: NPR 5-10 lakhs for undergraduate education
• Investment: Siddhartha Equity Oriented Scheme, starting with NPR 1,500/month
• Expected Growth: Assuming 10-12% annual return, this will provide the needed funds in 3-5 years.

B. Marriage Fund

Goal: NPR 10-15 lakhs per child

• Time Horizon: 10-15 years
• Monthly Allocation: NPR 2,000
• Investment: Fixed deposits, PPF
• Recommended Banks: Nabil Bank, Global IME Bank
• Expected Growth: Assuming 7% annual return in fixed deposits, this will accumulate a significant corpus over 10-15 years.

C. Retirement Fund

Goal: NPR 25-30 lakhs

• Time Horizon: 20-25 years
• Monthly Allocation: NPR 2,000
• Investment: Employee Provident Fund (EPF), NPS, NIBL Pragati Fund
• Expected Growth: Assuming 8-10% annual return, this will provide a substantial retirement fund.

5. Lifestyle and Expense Management

Monthly Expense Allocation:

• Fixed Expenses (NPR 10,000): Rent, utilities, groceries
• Education (NPR 5,000): School fees, books, tuition
• Savings & Investments (NPR 7,000): Allocated as described above
• Miscellaneous Expenses (NPR 3,000): Healthcare, transportation, discretionary spending

Tips for Effective Expense Management:

• Track Expenses: Use a budgeting app to monitor spending.
• Cut Unnecessary Costs: Identify and eliminate non-essential expenses.
• Plan for Contingencies: Keep aside a small amount for unexpected expenses.

6. Review and Adjust

Regularly review your financial plan (at least annually) to ensure it aligns with your goals. Adjust allocations as necessary based on income changes, inflation, and financial market conditions.

7. Tax Planning

In Nepal, utilize tax-saving instruments like EPF, CIT (Citizen Investment Trust), and voluntary provident funds to reduce your taxable income.

8. Professional Advice

Consider consulting with a certified financial planner in Nepal to tailor this plan more precisely to your circumstances and to get personalized advice.

By following this structured approach, you can systematically work towards securing your children's education, marriage expenses, and your retirement while maintaining a comfortable lifestyle within the Nepalese financial context.

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Example Calculation Breakdown

Emergency Fund Calculation

• Monthly Savings: NPR 2,000
• Target Fund: NPR 1,20,000 (10,000 x 12 months)
• Duration: 60 months (5 years)

Education Fund Calculation (Son 1)

• Monthly SIP: NPR 1,500
• Annual Return: 12%
• Duration: 15 years
• Future Value: Using compound interest formula

$FV = P \times \left( \frac{{(1 + r)^n - 1}}{r} \right) \times (1 + r)$

Where:

• $P$ = monthly investment (NPR 1,500)
• $r$ = monthly interest rate (12%/12 = 1% or 0.01)
• $n$ = number of months (15 x 12 = 180)

$FV = 1500 \times \left( \frac{{(1 + 0.01)^{180} - 1}}{0.01} \right) \times (1 + 0.01) \approx NPR 10,35,000$

Marriage Fund Calculation

• Monthly Savings: NPR 2,000
• Annual Return: 7%
• Duration: 15 years
• Future Value: Using compound interest formula

$FV = P \times \left( \frac{{(1 + r)^n - 1}}{r} \right) \times (1 + r)$

Where:

• $P$ = monthly investment (NPR 2,000)
• $r$ = monthly interest rate (7%/12 = 0.583% or 0.00583)
• $n$ = number of months (15 x 12 = 180)

$FV = 2000 \times \left( \frac{{(1 + 0.00583)^{180} - 1}}{0.00583} \right) \times (1 + 0.00583) \approx NPR 9,80,000$

Retirement Fund Calculation

• Monthly Savings: NPR 2,000
• Annual Return: 10%
• Duration: 20 years
• Future Value: Using compound interest formula

$FV = P \times \left( \frac{{(1 + r)^n - 1}}{r} \right) \times (1 + r)$

Where:

• $P$ = monthly investment (NPR 2,000)
• $r$ = monthly interest rate (10%/12 = 0.833% or 0.00833)
• $n$ = number of months (20 x 12 = 240)

$FV = 2000 \times \left( \frac{{(1 + 0.00833)^{240} - 1}}{0.00833} \right) \times (1 + 0.00833) \approx NPR 15,23,000$

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By implementing this plan, you can effectively manage your current expenses while securing a financially stable future for your family.

Disclaimer:

The financial advice and recommendations provided in this article are for general informational purposes only. The specific circumstances of the individual described have been used as an example, and the advice may not be suitable for everyone. Individual financial situations vary greatly, and it is important to tailor any financial plan to your own unique needs and goals. Before making any significant financial decisions, including those related to education, wedding expenses, retirement, and lifestyle planning, it is strongly recommended that you consult with a qualified financial advisor or planner who can provide personalized advice based on a comprehensive review of your financial situation. The author and publisher of this article are not responsible for any financial decisions made based on the information provided herein.