Father’s Day 2023: Parenthood can be considered as one of the most beautiful and daunting journey in a person’s life. The sudden emergence of a little one brings about not only a wave of joy but also increased expenses. These costs are known to only get higher by the years with the needs and ambitions of your children. New parents should hence consider their children’s future requirements and start their financial planning well in advance.
New parents should now factor that there has been a major shift in the environment in comparison to the one that their parents lived in. The professional and educational landscape has witnessed a visible change over time. Children now a days have a choice between varied professional options. The nature of careers now ranges from a Statistician to an Equestrian. In order to achieve these career goals, kids now prefer a more specialized field of education. While at the same time, more and more youngsters want to pursue their education abroad.
These dreams and aspirations require parents to plan for the significant expenses for their children’s future. Therefore, a meticulous financial planning is mandatory. Here are a few tips that new fathers can consider,
1. Understand your financial goals better – Being a new parent also means understanding your financial priorities. Having a new member in your family would mean that the parents would have to revisit their existing financial goals and restructure them according to needs of their children. The budget would now be defined by their existing goals along with the cost of their children’s education, future, unexpected medical requirements, etc. Setting a well-defined budget would then help in the necessary financial planning.
2. Create financial protection for your children – Parents must bear in mind that life insurance is the foundation while planning your finances. Investing in a term insurance plan helps to provide the needed financial security for your children in case of any misfortune. Today’s modern term insurance policies offer features like child’s future protect that provides an added financial security to your child’s future.
3. Protect your child’s dreams and aspirations – Parents always strive to safeguard their child’s dreams and aspirations while working towards eliminating any form of limitations. There are certain milestones that occur in a definite timeline in a child’s life such as school, college, hobbies, professional courses, etc. that are important and hence it is necessary to make the required provision. Parents must thus look out for mediums of investments that are safe in nature as this would provide the needed safety net for their children. Lower to medium risk investments such as a fixed deposit or a guaranteed return insurance plan would prove to be optimum.
4. Prepare for unexpected expenditure that helps in avoiding debt – Parents must also prepare for situations that may bring about unexpected expenditure. They must factor the unforeseen circumstances such as a shift in market, inflation, loss of job, etc. while planning for their children’s future. To avoid falling prey to debt traps caused by these factors parents could consider investing in second income plans, saving insurance plans, or fixed deposits as it would provide flexibility and agility to incorporate your evolving financial needs.
5. Revisit and restructure your financial plan – Parents should make it a practice to revisit their financial plan after a well-defined period of time. This would help in situations where your child evolves as they progress through their formative years as their choice of career might also evolve. Hence it is naturally possible that their financial requirements too might grow or change. Therefore, it is important to revisit your financial plan at regular intervals and ensure that your financial solutions are flexible.
While planning for your child’s future one must keep in mind that there is no one-size-fits-all formula. It is a difficult task as it varies from individual to individual. This would require the parents to identify various financial solutions that would cater to every need of their child and at any given stage in life.
-The author is Chief Distribution Officer, Edelweiss Tokio Life Insurance. Views expressed are personal.
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