Your daughter earns Rs. 44,612 per month as take home salary. You were initially very happy and proud about this.

Then 3 months passed, you got her passbook updated, and noticed that she had a balance of 29, 643.

You thought it was about Rs. 100,000 short ­čÖé

What happened?

Well there was a phone, a few shoes, some dresses hanging in the cupboard…but hey Rs. 100,000!!

So you sweetly went to your husband and whispered in his ear.

Darling, not that we need the money but should we not talk to Nandita  about her financial life?

Your husband said ‘she is earning, let her do whatever she wants’ – we have more than enough, do we not.

Now, you had a major battle. Husband and daughter. Daughter was BLOWING her hard earned money and father was SUPPORTING it. She was an accountant by qualification, dammit.

3 more months passed. Another 100,000 gone. Dressed hanging, shoes in shoe rack. Your younger son got a nice Nikon Digital camera for Rs. 39,500. Awesome.

Now your husband was irritated with your nagging and perhaps a little concerned too. After all her salary had gone up in GROSS but not much on the NET simply because she was already at a high tax slab. She was not even putting the Rs. 100,000 in PPF (this is a middle class obsession – almost like an identification card!)….

So your husband suggested something which sounded like nectar to your ears…

“I will buy a flat in the outskirts of the city – make the down payment, and FORCE Nandita to pay the EMI over the next 23 years. This will force Rs. 20, 654 out of her monthly salary, AND FORCE HER TO SAVE!”.

Yes this EMI will continue for 20 years – or earlier if she decides so. …

You and your husband decided that your darling, hardworking daughter will start a SIP in equity funds, but will skip a few payments.

The SIP is not as COMPELLING as a housing loan EMI – here she will make sure that the payment gets done.

Her salary will keep going up and as a % age of salary

Brilliant Move.

Now the caveats. The parents should be sure that they can afford the Rs. 30 lakhs of the cost of the house. Just in case the daughter decides to quit her job for further studies. Making an assumption that if the daughter pays for 5-6 years, the dad can always pay the balance is not a great assumption, so please be careful.

– if the real estate prices go down promise not to panic

in about 5-6 months time the house may be given on rent, so the cash flow strain will be lowered

the daughter should repay the dad, or the ITO may act funny (there is no legal provision for him to trouble you, I assure you)

I now know of 3 fathers and one uncle (mama) who have implemented this solution.

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  1. Very true!
    I almost fell into that trap. Still I have people around me advising to invest in flats that starts from 60-70L and goes upwards. The indian middle class knows only about 3 assets-debt, gold & real estate.
    Only regret I have so far is that I never invested in equity or MF SIPs from age 23 to 28.

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