I'm a single mother with a 4-year-old child and have had an LIC policy for 14 years. How can I find financial stability with a Rs 40k full-time job starting next year?

I'm a single mother with a 4-year-old child. I'm a counsellor. I work part-time online at a firm where they deduct and pay the taxes. I have my private practice online as well, which is again part-time. I earn around Rs 65-75,000 per month in total.  

I live with my parents but want to move to Bengaluru for a proper nine-to-five job and a child's education. I saved Rs 10 lakh for the next three years for the child's educational expenses and parents' medical emergencies, if any. It is in cash and gold. Because a full-time job pay would be less, it would be between Rs 40,000-50,000 or a maximum of Rs 60,000. I have had an LIC policy for 14 years, paying around Rs 35,000 annually. No other investments. How can I find financial stability with a Rs 40,000 full-time job from next year?

If I get in, I also plan to join a Ph.D. program with only a Rs 25 to 32,000 stipend. So, in both my options, pay is less than what I earn now online. What are the suggestions? I'm not legally separated, but I have no support from my husband's side. Since I'm focusing on building my financial stability and stable job,  I'm not filing for divorce now. Please guide me. 

Reply by Reply by Sushil Jain, CEO, PersonalCFO.in

We appreciate that you plan a full-time job despite the income cut, providing a fixed income and a sense of security. It is also a good move for all of you as in Bengaluru, your child gets a good education, parents get good medical facilities, and most importantly, you will get more career opportunities. But you need to do a reallocation of your investments. You can plan as follows.

Your Rs 10 lakh should be divided into three parts, first in the bank and liquid fund as an emergency fund, which should be around 3 to 6 months of your household expenses. The second should be in a debt fund, which may be a fixed deposit, Gold, or debt mutual fund, and the third should be in an equity fund for long-term growth. The asset allocation should be based on your risk profiling and financial goals.

For medical emergencies, you must have a health plan for your family that covers not only your parents but also your child and you.

Review your LIC plan; if possible, choose the paid-up option and take a term plan, giving you more coverage with less premium.

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By taking the above steps, you can secure yourself as well as your family to some extent and review your plan every six months as and when your inflow increases.

Last but not the least, prepare a Will to distribute your wealth and file an income tax return regularly to get a refund, if any.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)