Monetary Planning – Dilemma of a younger earner


There is never a happier moment than when a young earner gets in touch looking for a financial planner/advisor. The idea that someone wants to get the direction and actions right from the beginning is very encouraging for a practitioner.

Now, this person here has recently got into a job. She has tried her hands in the DIY mode only to realise that the pressures of the job leave very little time. She is better off working with someone to help her make the right decisions.

A related payoff is that she will possibly learn the ropes in someone’s guidance.

Now, here’s what the interesting part is.

This person is running an educational loan with a balance tenure of over 10 years and an outstanding balance of over Rs. 15 lakhs.

One of her big objectives is to save and invest so that she can close her loan in the next few years. Clearly, that is an important goal for her and as I would say an important step for ‘feeling’ financially independent.

I presented an alternative.

“Why don’t you use every single bit of your saved money to first pay off the loan over the next couple of years and then plan to invest?

While you have done that, you will also likely to have a better clarity on what you want to save for or what you want your money to do for you?

Now, of course, every numbers loving person would suggest that if the net tax interest rate is around 7% and you can earn even 10% from your investments, isn’t it better to invest now and pay off the loan later.

My only 2 bits here – “what if the investment return assumption doesn’t work out in the time period you have in mind?

“Hmm. Something to think about!”

These are the kind of people and discussions that make the work so exciting.

Sometimes, good money decisions are not just about earning a higher return, but about feeling in control of your life and not losing sleep.

What do you have to say to this young earner’s dilemma of sorts?

Announcement: I am doing a a virtual session on “Building your own financial plan for 2022“. This will be a 2 hour online session on Saturday, December 11, 2021. Registration details will be shared tomorrow.


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