Life is unpredictable and insurance gives protection against unforeseen circumstances, says Palka Arora Chopra, Senior Vice President, Mastertrust.
In an interview with MintGenie, Chopra said that children must understand that to secure the future, money is valuable, and growing their finances is paramount.
Q. What is the most important financial lesson that you would like to impart as a mother to your child?
The first lesson I would teach my children is the importance of saving money wisely to secure their future. Cultivating a habit of saving, even a small portion of allowances, goes a long way toward empowering them to achieve their goals.
The second would be to impart in them the skill to distinguish between needs and wants, which is not only crucial to saving but also fundamental to wealth creation and money management. This way, they can learn to handle unexpected expenses while pursuing opportunities with a robust financial foundation.
Q. At what life stage of the child, do you think mothers must start discussing savings and investments with their wards?
If a child can save money received from visiting guests and relatives, I believe they are mature enough to understand the other dimensions of saving. It is reasonable to introduce the concept of investment to children since they are capable of understanding and reasoning as early as age as seven years old, which is crucial to imbibing healthy financial habits.
Children must understand that to secure the future, money is valuable, and growing their finances is paramount. One way is to include them while budgeting a family outing or a holiday; ask their opinion on spending limits, prioritizing expenses, etc.
Q. Is it homemakers or working women, why should women focus on buying insurance for themselves?
Life is unpredictable and insurance gives protection against unforeseen circumstances. Additionally, it helps in mitigating stress during difficult times, by providing access to quality healthcare such as preventive care and routine checkups alongside other expensive medical treatments. Thus, whether a housewife or a working professional, insurance plays a vital role in improving the quality of women.
Q. What financial gifts would you like to gift yourself as a mother this year?
For me it would be two things – one is a good corpus for retirement. Undoubtedly, I want to maintain the quality of my life in retirement, and for that, I have been investing for some time. Thus, I encourage every woman to become considerate about her future and start investing from a young age.
Second, to save my children from the hassle of arranging education funds for themselves, it is important to set out investments for them as education standards and costs are going up every day.
Q. Do you advocate mothers working on a separate retirement corpus to secure their future?
Yes, absolutely yes. The importance of a separate retirement corpus as a form of valuing self cannot be overstated. Being independent in retirement is not only critical for your self-esteem but also provides a sense of fulfilment. Investing for the future (aka retirement planning), as early as possible can be highly rewarding in the long run.
Q. More people are now writing wills to remove discrepancies regarding the nomination. Do you think today’s mothers should also pen their wills?
Yes, they should. No mother wants their children to go through the complicated and painstaking legal process of claiming their rights and leaving them to fend for themselves. At the end of the day, there comes a stage when children begin living independently, and the harsh reality is money has become a need to live a good life. Of course, parents have the right to decide their wealth distribution, but it's equally important to consider the secure future of the children.
Q. Which investment instruments do you think would serve best to today’s mothers?
While there is no concrete answer to this since it depends on the woman’s stage of life, one must take into account financial goals, risk profile, and personal savings, alongside income. Though health insurance and term life insurance are a must, having concrete long & short-term goals is crucial in choosing the investment instruments depending on the risks involved.