Parenting is a wonderful and most joyous experience for most couples. Being a good and caring parent comes with its own set of responsibilities. The most significant of which is providing a secure future for children. Responsible parenting often involves mindful calculation of finances to provide your children with adequate financial security. Building his / her future beginning with a great education to provide for good health requires a certain amount of financial planning for which most parents should start early.
In order to avoid unforeseen exigencies and to provide your children with a secure future, you must review your financial situation periodically and where appropriate course correction needs to be undertaken.
Risk appetite can vary from individual to individual and will need to be borne in mind when planning expenditures. Be cognizant of this and plan your investments accordingly. It is necessary to understand that not all returns will accrue to you in the short-term. The key is to be patient and informed of your investment decisions. Some of your child’s milestones you may want to plan for are in the long-run and therefore, it will be prudent to choose appropriate investment vehicles.
Remember, it is okay to start small, but a good beginning is the key.
Prioritise your expenditure
As a parent, you must also prioritise investing money for your child’s future. Many insurance companies have attractive child plan investment options which you can explore. This will create a sufficient pool of investment from which you can spend for your child’s future needs without hesitation.
Undertake a budget exercise where you calculate your income and expenditures and ensure there is some amount to invest. Do not worry if the amount is low to start with but prioritising financial investment from early on will take a load off your back in the years to come.
Track investment performance
Often, once an investment has been made, you may tend to forget about it unless it is time to file / submit a few documents. Keep a regular track of the investments you have made so you can course correct or keep on the current path depending on performance. Many investment houses share regular investment performance updates which you can go through. Reach out to your financial advisor or read through education material which is adequately available online through credible resources to enable you to make smarter investment decisions.
Security through insurance
A majority of us strongly believe that nothing unpleasant will ever happen to us. However, being prepared to face such challenges always creates a safety cushion in such events. You do not need to wait for a setback, whether it is for unforeseen health expenditures, unforeseen accidents or others before taking a decision to purchase insurance.
Purchasing an appropriate insurance cover is the best possible means to prepare yourself for any such events. Insurance helps in getting back on your feet as soon as possible. In such exigencies, you will be able to focus on recovering from the situation or help your child through the situation, rather than having to worry about insufficiency of funds to meet unexpected expenditures.
Additionally, life insurance is a necessity, especially if you are the sole earner. If you do not have adequate insurance cover, despite all the planning, any unfortunate circumstance might impact your savings / investments.
Prepare for emergencies
However farsighted you may be with planning, there is never any harm in keeping aside a select fund for emergencies only. This can be your go to amount which you may use only when other alternatives may have dried up.
While this is not an exhaustive list of what you need to do, it will help you start at a comfortable position with financial planning for your family. Most importantly, review your entire financial plan on a regular basis to ensure you are thoroughly informed of your family’s financial journey. Building financial discipline from Day 1 ensures a smooth journey for all your family members including children.
Mr. Subramanyam Brahmajosyula, Head - Underwriting & Reinsurance, SBI General Insurance