Financial planning for a family of two is easy, as you manage expenses and savings. But with children coming along, everything changes from the regular schedule to the bank balance. You plan for the little person’s needs until she grows up, pay for clothes, schooling, and everything else. Without a plan and goals, financial planning soon becomes a challenge.
A child ensures responsibilities for parents who desire the best for their children besides securing their future. Planning their future well in advance prepares you for many life stages, including vital phases of your child’s life such as education, higher education, health care, and also a wedding. Keep these things in mind to plan your child’s secure financial future. Here’s a guide to achieve your financial goals for your child.
DEFINE FINANCIAL GOALS CLEARLY
Rome was not built in a day and certainly took much preparation and planning. From purchasing a house to paying tuition fees for your child, you won’t get much done without a plan to build upon. Without waiting for water to rise above your head and then start making moves, prepare financial goals early and initiate action. Start by finalising a list of all things you intend to achieve. Once you’ve accomplished that, estimate the time taken to achieve each goal. When you know exactly how much money and the time each goal would require, investments can be factored in accordingly. For major investments like buying your house or paying for your daughter’s education, you will never get much done without a stand-by plan ready.
ASSESS RISKS & SECURE YOUR FAMILY’S LIFESTYLE
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Everyone has had friends who invest in rather risky stocks and suddenly makes a fortune. But each family is different and so its financial needs vary. If not used to taking some risks, avoid any investment in volatile assets and opt for investments with stable incomes instead. If your family’s lifestyle is predictable and constant, adopt very few new practices with common habits that last forever. Always keep some sums of money aside to fulfil basic day-to-day needs and emergencies.
INVEST IN A LIFE INSURANCE POLICY
Life insurance policies can support the family through trying times when you are gone. Never delay taking one out. While choosing policies, select schemes to benefit your family now and also later. Start from an income tax perspective and if the life insurance policy isn’t tax-efficient, your family will not survive for long. Thus an appropriate life insurance policy is critical to ensure your family’s future financial support.
THE GOLDEN RULE FOR SAVINGS
Our elders advise savings first and spending last. Put that advice to good use by saving enough funds for basic needs and then spend money on them, as also your wants. When building wealth, you can’t spend lavishly but must ensure reasonable goals, as under:
- Start investing as early as is possible
- Invest as per the child’s short-term and long-term goals
- Purchase health and term insurance covering your children
- Look for partial withdrawal investment plans
- Appoint a Nominee
BOTTOM LINE
Saving money can never be easy, as many things tempt you, but your self-control is being tested. If you are smart and don’t waste money, your savings goals will be achieved much before time.