Financial Planning for DEWKS
ABSTRACT
In today’s environment of VUCA (Vulnerability, Uncertainty, Complexity, and Ambiguity)
where uncertainty is growing, financial planning is very essential to beat the Inflation.
DEWKs refers to the household where both the spouse is earning and have at least one child,
therefore their financial planning is different from other households. Primary data was
collected using a structured questionnaire. The major findings of the study were, 84.5% of
people were investing in bank deposits, where banks provide only 4-6% interests rate. 76.4%
people had considered life insurance and medical insurance in their financial planning. 54.1%
of people invest in such a way so that they can claim maximum tax benefit.
Key words: Financial goals, DEWKS, financial Planning. VUCA, DINKs, Disposable
income, Inflation, Rate of Return,
Introduction:
Financial planning refers to management of finances in such a way that a person can achieve
his/her financial goals. It is the need of the hour considering that we are living in VUCA
(Vulnerability uncertainty, Complexity, Ambiguity) world. It helps in analysing financial
goals and managing the income. If a person fails to manage his finance in a proper way, it
leads to accumulation enormous debt. Financial plan helps to tackle the uncertain events
smoothly, without compromising wealth.
Financial goals should be set in using SMART (Specific Measurable Actionable Realistic
Time bound) approach.
DEWKs refers to the household where the individual and his/her spouse are earning and have
at least one child. In such a household there are two sources of income and therefore needs to
be managed properly, failure to do so will lead to fluctuations in the path of achieving
financial goals despite having high disposable income compared to single income household.
DEWKs tend to save more than DINKs (Dually employed with NO Kids). Financial plan is
very essential for DEWKs as they have the responsibility of their children to provide them
better standard of living and education. They have to be cautious while saving and investing.
They have more expenses to take care of and therefore their disposable income is less.
Generally, DEWKs have goals like child’s education, Buying a house, family Vacations,
Estate planning, Uncertainty fund etc.
Factors important to keep in mind while investing by DEWKs are Income level, child’s
education level, health.
Components of Financial plan are: Income, Spending, Savings, Investing and Protection.
Components of Financial Planning
Income Spending Saving Investment Protection
Income is Outflow of Income
inflow of Cah leftover Purchase of Protection from
money in after assets and uncertain events
It Should be
house. less than Spending creating Involves
Income wealth insurance, estate
and retirement
planning
A good financial plan says that every individual must save 3 months of Income or expenses
for emergency fund. Investments must be made in such a way so that it gives a good Rate of
return to beat the inflation.
Literature Review:
Biradar Shivkumar and Balkrishna Hibare (2021) in their paper studied the perceptional
analysis of individual for personal financial planning. The paper was conducted to study the
awareness and knowledge of PFP of salary earners. The study was based on primary data.
The paper concluded that about 40% of respondents were not aware about PFP and 45% of
respondents did not consult to professional for their financial decisions.
Chandra Kumud and Bhuyan Ujjal (2022) in their paper studied the level of financial
planning and financial wellbeing of individuals in Jorhat District. The study was based on
primary data. The paper also studied the reasons and challenges faced by respondents while
financial planning. The paper concluded that a good financial plan results in good economic
wellbeing in the life of individuals.
Adhikari Risav and Poddar Shiwangi (2021) in their paper studied the difference in
perception and investment pattern of same generation group. This was based on primary data
through a structured questionnaire among 140 respondents. This paper concludes that young
generation is active investor and older generation is passive investor.
Gupta Surbhi, Verma Sanjeev, Sharma Kuldeep, and Gupta Ritesh (2020) in their paper,
studied the tax awareness among the assesse and how they use this knowledge in wealth
creation. The study was based on primary data. The paper studied the assesse’s knowledge of
Income Tax Act and its deductions in deciding the investment portfolio which maximizes his
earnings and minimizes the Tax amount.
Methodology:
The study is based on primary data, which collected through a structured questionnaire
distributed through social media platforms. The study used snowball sampling method for
collecting data. The sample size is 60 Respondents.
Objectives of the study:
1. To study the investment pattern of DEWKs
2. To study the tax planning of DEWKs
Discussion and Analysis:
Demographic profile
Table 1. Demographic profile of Respondents
Basis %
Gender Male 29.7
Male 68.8
Prefer not to say 1.6
Occupation Service 42.2
Business 14.1
Profession 9.4
Others 34.4
Age Below 30 years 40.6
30-45 years 29.7
45-60 years 29.7
Income Below 3,00,000 39.1
3,00,000-6,00,000 25
6,00,000-9,00,000 12.5
9,00,000-12,00,000 12.5
12,00,000-15,00,000 6.3
15,00,000 above 4.7
No. of children 1 36.1
2 50.8
3 or above 15.1
No. of Dependent member 1 36.5
in family 2 36.5
3 or above 27
Investment planning:
Chart 1: Income management
Proportionately saved from both the
47% incomes separately
53% Expenses are met with one's income
and other's income is saved
Source: Sample Data
Observations: 47% of respondents (household) meet their expenses from one’s income and
other’s income is saved. 53 % of respondents save from both incomes separately.
Chart 2: Investment Avenue opted for
Pension Fund 22.60%
3.20%
ETFs
Real estate 25.80%
1.60%
Artifacts
Physical Gold 26.00%
post office schemes 21.00%
Mutual funds 41.90%
PPF 38.50%
Equity market 23.50%
Bank deposit 84.50%
Source: Sample Data
84.5% of respondents invested in Bank Deposit, for the purpose of safety.
41.90% respondents prefers Mutual Funds, as they wanted to diversify their finance.
38.50%, 25.80% and 26% of respondents invested in PPF, Real Estate and Physical
Gold respectively.
22.60%, 21%and 38.5% invested in pension fund, post office schemes and Equity
market respectively.
Loan Taken and proportion of income spend on Interest on Loan
Chart 3:Loan taken Chart 4: Proportion of
Income goes for Loan Re-
payment
10-20%
20-30%
Yes Above 30%
45% 27%
55% No Not Applicable
48%
15%
10%
Source: Sample Data
55% of respondents have taken Loan, out of which 27% of respondents pay 10-20%
of their income for loan, 15% of respondents pay 20-30% of their income and 10% of
people pay more than 30% of their for loan repayment. It increases their expenses and
reduces savings. Respondents who pay more than 30% of their income for repayment
of loan do not have a good financial plan.
45% of respondents have not taken any type of loan, it increases savings but not
taking any type of loan impacts the CIBIL score.
Insurance
Chart 5: Life Insurance Chart 6: Type of Life
Insurance Policy
term Insurance
24% Unit Linked
yes 11% Insurance Plan
no Money Back Pol-
14% icy
Others
76% 75%
Source: Sample Data
Chart 7:Insurance Cover
16% Below Rs. 5 lakh
Rs. 5 lakh -Rs. 10 lakh
4% 35% Rs. 10 lakh -Rs.15 lakh
8% Rs. 15 lakh - Rs. 20 lakh
above Rs. 20 lakh
37%
Source: Sample Data
76% respondents have taken life insurance out of which 75% respondents have taken
Term Life Insurance, 14% have taken Unit Linked Insurance Plan and 11% have taken
Money Back policy. In a good financial plan an individual must have at least one Life
Insurance for the protection purpose.
35% of respondents have taken the policy of below Rs.5 lakh, 37% have insurance
cover of Rs.5 lakh to Rs.10 lakh, 8% have cover of 10-15 lakh Rs., 4% have Rs.15
lakh to Rs.20 lakh Of insurance cover.
16% of respondents have insurance cover of above Rs.20 lakh. Higher the insurance
cover higher will be the premium.
Medical Insurance
Chart 8:Medical Insurance Chart 9:Medical Insurance
taken for dependent members
Yes
Yes
24% No
37% No
planning to take
53%
64% 23%
Source: Sample Data
63% of respondents have taken medical insurance for themselves and 37% have not
taken.
53% of respondents have taken medical insurance for the dependent members, 23%
have not taken it and the remaining 24% of respondents are planning to take in
upcoming years.
It is taken with the purpose of facing any medical emergency without putting
Finanancial burden on family.
Chart 6: Investment for Child’s Education
Chart 10: Investment for child's Ed-
ucation
29% 32% Yes
No
Planning o take
39%
Source: Sample Data
32% of respondents have invested for their child’s education and 39% of respondents
have not invested anywhere.
29% of people were planning to invest for child’s education.
Investment for child’s higher education should be done at early age of the child so that
less amount is invested for longer duration to get desired maturity amount.
Tax Planning
Chart 11: Reasons for filling Tax Return
Notice from IT
3.80%
Department
Carry Forward Loss 5.80%
Refund Claim 44.20%
Regular Provision 67.30%
Source: Sample Data
67.30% of respondents file ITR because of Regular provision, 44.20% file it for
claiming Refund, 5.80% of people file ITR for carrying forward losses in case of
income from house property or from business or profession.
3.80% of respondents file ITR because they received notice from IT department.
Chart 12: Purchase of house to save on Taxes
39%
Yes
62% No
Source: Sample Data
38% of respondents have purchased house to save on taxes, it means they have
invested in real estate.
62% of respondents have not purchased a house either they stay in rented house or
buying a house is not for the purpose of tax benefit.
Chart 13: Investment are done in such a way that both can claim benefits
37%
yes
51% No
Not sure
12%
Source: Sample Data
In DEWKs household, 51% of respondents invest in such a way that husband and
wife can claim maximum tax benefit.
49% of respondents are investing to claim tax benefit separately.
Chart 14: Advice Taken for Tax planning
6%
2%
16%
Friends
Relatives
Professionals
Own Research
76%
Source: Sample Data
76% of respondents take the advice of professionals for tax planning.
16%, 6% and 2% of respondents take advice from their relatives, friends and do their
own research before making investment to claim tax benefit.
Recommendations:
People can invest their Emergency Fund into in Liquid Mutual Fund as it gives
liquidity as well as higher rate of return as compared to bank deposit which gives 4-
5% return.
Households can use 50/30/20 budgeting method in their financial planning where
50% for essentials, 30% discretionary expenses and 20% for investments for future
needs.
For emergency fund an Individual must kept aside his/her 3 months of living expenses
and once it is filled, he/she can save for achieving financial goals.
Conclusion:
An Individual of a DEWKs household is in a place where he /she has a partner to split the
lifestyle expenses as well as can take a powerful move for investments, which reduces the
financial burden of an individual. Every individual plans his finances either taking advices
from professionals or gaining knowledge on their own. The study concluded that individual
generally prefers investing in Bank Deposit, following the principal of safety. They prefers to
take Tern Insurance. They take advice from professionals before investing so that they can
claim higher tax benefit.
References:
Shivkumar, B. and Balkrishna, H. (2021). Personal Financial Planning : Perceptional
Analysis, Institute of cost accountant of India, vol 56, No.11
Chandra, K and Bhuyan, U (2022). Personal Financial Planning and Financial Wellbeing : A
study On school Teachers in Jorhat district, Xavier Institute of management and
Entrepreneurship, Vol 16, No 2
Adhikari, R and Poddar, S. (2021). Generation differences in Personal Finance Behaviour: A
insight into investors in Kolkata, Lttice Science Publication, Vol 1, No 2
Gupta, S., Verma, S., Sharma, K. and Gupta, R. (2020). A Study of Tax Planning in Respect
of Wealth creation of Assesse, International Journal of Commerce and Management, Vol 7
