It is true that entrepreneurs do not have a fixed retirement age in India like salaried employees. They could work as long as they wish but at the same time they do not have the security of provident fund savings or pension after they decide to take retirement.

That is why, it is absolutely important for the self-employed professionals and small business holders to work out their pension plans when they can still work. In fact, it is not possible for a person to work whole life. After certain age, you will eventually want to retire from your self-raised business. No matter how successful you are and how much you earn today, only a proper retirement planning could give you a peaceful retired life.

Are Pension Plans Only for Salaried People?

Since entrepreneurs have the freedom of working throughout his life, you might be wondering if self-employed professionals need a retirement planning at all. The answer would be, yes, they do require pension plans  just like a salaried individual. Superannuation is not meant for only service holders but also small business owners and professionals. They are, surely free to choose their retirement age but sooner or later they will choose to retire. To make your retirement days vibrant and relaxing you need to work out your retirement savings goals just like job holders. Remember, after your retirement there would be no provident fund or pension to support your livelihood. So, it is wise to start saving for your old age security beforehand.

10 Reasons Entrepreneurs Consider Having Pension Plans

Nobody wants to live his retired life in full of worries. You can take the real fun of retirement days only when you feel secured. Sense of security only comes when you have saved enough for your future. In fact, small business professionals and entrepreneurs should be more careful about their pension plans because they do not have the security umbrella of EPF. Only with systematic planning and regular savings entrepreneurs can build corpus for their retired days. Here are the 10 major reasons why entrepreneurs should consider having their retirement plans:

1. You Will Choose to Retire, Sooner or Later – No matter how much you love your work and how hard working you are today but at certain point of time you, surely, will choose to retire. It is true that being an entrepreneur you can work as long as you desire. But that does not mean that you will never feel the desire to retire someday. This is the reason you need pension plans for securing your retirement days.
2. To Remain Self-Sufficient – Being an entrepreneur you have always stayed independent and self-sufficient. You may have never depended or worked for anyone in life but for yourself. So, retirement savings would keep you independent even after you choose to retire. It is wise to work out a proper pension planning at the very beginning of your career based on your requirements. While estimating your future requirements and expenditures always consider the growing age, rising cost of living and ever growing inflation rate. Your retirement savings goal should be determined considering all these factors. Only systematic pension plans can meet your retirement expenses, cope with inflation and at the same time keep you prepared for unpleasant turns of life without being depended on anyone.
3. Value of Money deflates – Another important reason to build up corpus for your superannuation is that the value of money gradually deflates over time. It is wise to save greater than you aim for because by the time you retire your savings may seem smaller than your expenditure. It is, thus, a matter of extreme concern that your pension plans should be worked out considering such future problems.
4. Greater Life Expectancy – With advanced medical technologies and greater awareness among people, life expectancy of a person has increased considerably. Greater longevity means you need more money to sustain the needs of your life for longer period of time. You superannuation planning should be adequate enough to provide a good life for longer period of time.
5. To Stay Prepared – Your retirement savings is not only meant for providing your livelihood but also an instrument to deal with unexpected events of life. This would give you financial support at the time of unforeseen requirements. Be it your child’s marriage or medical expenses of you or your loved ones, you can stay always prepared for any sudden lump sum expenditures.
6. To maintain Same Living Standard – The aim of pension plans also revolves around the fact that you would want to maintain similar living standard for the entire stretch of life or maybe a better lifestyle. The perfect picture of superannuation will only be completed if you have abundant wealth to relax in your retired life. You have no worries and burdens at this phase of your life.
7. Unexpected Medical Expenditures – With growing age you can never be sure about your health problems. You have to stay prepared for such unexpected medical expenditures. Though you have a comprehensive health cover plan but you never know about sudden requirement of expenditures you need to make towards health issues.
8. To Deal with Inflation – You need methodical and organized pension plans to ensure that you do not outlive your savings. Despite your hard earned savings and thorough retirement planning there still remains the risk of outliving your accumulated wealth far before your estimation. The increasing inflation is one big problem to deal with in your retirement plans.
9. To Take Care of Your Other Responsibilities – Remember when you are planning for your retirement you do not plan for your own future but also for your loved ones. You might have other responsibilities, too, during your retirement. This retirement corpus is not just for providing your requirement but also your spouse’s.
10. Leave Some Fortune for your Children – This may sound a little unnecessary but being an Indian parent you might also want to leave some fortune for your children or grand children too. It is a natural tendency of Indian parents to do more than they could do for their children’s future. That is the reason why your pension planning should be efficient enough to meet your requirement and maintain same living standard as before, keep you ever prepared for unexpected turns and at the same time save something extra for your children without compromising your own lifestyle.

Considering how often you use it, you think you would be better at saving money. But like remembering the garlic toast before it burns under the broiler or creating a flawless cat eye liner that matches the other eye, sometimes the things you do most often don’t come out as well as you hope. Managing your money is just one of those chores that doesn’t come naturally to you. It’s far too easy to make a few mistakes that stop you from saving properly. Luckily, it’s just as easy to fix these mistakes. Scroll down to see the most common mistakes people make with their finances, and make sure you aren’t making them, too!

Going Without A Specific Goal

A goal (or several — there’s no limit to the number you set for yourself) is a great way of focusing your financial attention, but it’s only helpful when you make it correctly. Setting a goal isn’t simply setting a basic intention and hoping for the best. Successful goals — ones that you can actually attain — are made mindfully with precision.

Everyone at one point in their life has said they need to spend less and save more. While well-intentioned, this promise doesn’t have the makings of a successful goal because it lacks detail. Effective goals answer the basic who-what-when-where-whys. In this case, you need to identify how much less you should be spending and how much more you should be saving. More still, you need to give a purpose to the way you spend and save your money. You must be able to know why you’re changing the way you use money.

For some single women, this may be paying down debt or saving for a new home. For others, it could be a week-long trip in the Galapagos or an iPhone X — no mean feat, as it’s heralded as Apple’s most expensive phone. For you, it could be entirely different. You need to think about what excites or concerns you the most and take it from there.

But you’re not done quite yet. Once you’ve identified your target, you need to assign a timeline to your goal. Figure out when you want to pay them off by. Then calculate what sort of payments you’d need to be making to hit that target.

Spending Without A Budget

Once you have a detailed goal, you need a budget to make sure your expectations are realistic. It helps you identify cash flow problems that stand in the way of achieving your goals. It does this by outlining the way you spend your money, so you can understand where your finances sit.

Unfortunately, the act of creating a budget isn’t very fun. While there are free money management apps that can help you, a budget is at its most effective when you’ve had a hands-on approach on its creation. When you sit down in front of an Excel spread sheet or an old-fashioned piece paper, you’re forced to confront your spending habits. It’s not always easy when faced with mindless overspending, but this realization can be what forces you to change your ways.

Carve out a time when you can devote your full attention to your finances. You’ll need enough time to review old statements and other financial documents so that you can track the way you’ve spent your money over several months. This will give you a better understanding of your long-term habits. Then itemize your spending by categories to see where you’re going wrong.

Living Without A Safety Net

A budget can help you plan for retail splurges and vacations. But that’s just the icing on the cake, so to speak. Before you can budget for the fun stuff, you need to make sure you’ve set aside enough cash to cover financial emergencies that may happen in your future. An emergency fund or financial safety net should be large enough that you can cover your fixed expenses for roughly six months should you get laid off.

Six month’s worth of wages can take a while to accumulate, so it’s important that you have a backup plan should a sudden bill, repair, or medical emergency occur before you’re ready. For urgent assistance, personal online cash loans offer an alternative to conventional financial resources. When you face a bill or household repair that needs immediate payment, check in with online direct lenders, like MoneyKey. They issue quick online payday loans that you can receive in as little as one business day, making it possible to cover unexpected financial responsibilities without delay.

Waiting Until You’re Ready To Invest

Investing is the financial buzzword of the day — and for good reason. When done correctly, investing is a sound way to prepare for the future promising higher rewards than just straight saving — even when compared to a high-interest account. The thrill of taking on risks in the market in the hopes of banking a huge reward is also a lot more exciting than sitting down to make a budget. For this reason, many people jump into stocks, ETFs, and robo-advisors before they should.

There are several problems with this eager approach. When you make premature investments, you’re tying up your money in a way that can harm you down the line. Most financial advisors suggest waiting until you have a nest egg of 3–6 months of your living expenses before you put any money towards the stock market.

It’s also difficult to achieve goals on budget once you split your money this way. If you’re without both goals and budget, then you could choose the wrong type of investment. We’re not talking about jumping on the Bitcoin bandwagon when most analysts warn against it. When you leap into investments without clear goals in mind, you could invest in a long term mutual fund when really you need help with a short term goal.

The bottom line: don’t stop there

Get familiar with your finances, so you can ferret out other mistakes you’re making with your cash. It could be as simple as buying coffee every day before work or as complex as using the wrong (low interest) savings account. Just don’t be content to stop. Cutting out toxic behaviors is only the first step. Like the three examples above, you need to figure out ways to fix your mistakes, so you can manage your money properly and start saving.