Money Management Tips For Would Be Fathers
Don’t be hasty in making investment decisions and always consult a reliable source to have the perfect plan in place.
Photo Credit : YourDOST
The happiness you experience when you and your wife learn about a new member is about to come into the family is unmeasurable. But after a wave of joy passes by, you also come to terms with the fact that raising a child in today’s world is an expensive affair. To free yourself from that worry and focus on the happiness of a new child, you need to plan certain things in advance.
The first thing every to-be-parent needs to do is discuss how a baby will be impacting your finances and financial decisions. Have a discussion with your spouse about everything from your current lifestyle expenses to if one of you decides to take a break, how will the costs look like. Once you have a fair idea of your financials, it’s crucial to plan for the future. The best way to prepare for your child’s future is a goal-based planning approach.
Don’t just look at immediate goals like prenatal and post-natal expenses but also consider major milestones like high-school, graduation, marriage, etc. This will help you look at the larger picture and be ready for all situations. Investing a small sum of money from the time your child is born will allow you to have ample time to build a good corpus for your child’s education and marriage. Since planning and investing for all of your child’s needs in one go will be difficult, divide them into three separate sections;
Short term goals: This will include expenses like your children’s school fees or payments for extracurricular activities. Money invested for such purposes is advised to be kept in a Liquid, Arbitrage Fund.
Mid-term goals: These goals are the ones to be completed in 3-5 years and could be invested in debt and Balanced Mutual Funds.
Long term goals: Any goals that take more than five years are to be marked as long terms goals. Expenses like higher education, marriages, etc. fall under this category.
Once you have separated your goals, understand the investment opportunities that will get you maximum returns. When you become a father, everyone from the milkman to your father has an opinion on what should be the right approach. Instead of getting caught in casual pieces of advice, consult a financial planner who can guide you towards your goals in a systematic manner. Additionally, here are some money management tips that will help you plan better:
Make a budget & stick to it: Diapers, toys, baby products, food, etc. may seem like small expenses, but these recurring costs will significantly impact your family’s budget. This is why it important for you to create a budget, keeping in mind all these expenses and follow it.
Create an emergency fund: Unforeseen expenses like medicines you didn’t consider or certain emergences post-delivery might occur, and you need to be prepared for it. Once your child grows up Inflation and other factors can also affect your finances. Thus it is crucial to have at least three to six months’ worth of living expenses covered.
Save and invest regularly: Consistency is an important aspect that is missed out by most to be parents. Often people invest a huge sum and forget about it, but that might not be the right approach. Investing in mutual funds through monthly SIPs from the time of the child’s birth can help build a sizeable corpus for the child’s education or marriage.
Becoming a parent can be an overwhelming experience but it is important to calmly think through it all and plan for a secure future. A planned financial approach will not only benefit your child but also keep you in good mental health to focus on your growing child rather than worrying about expenses. Don’t be hasty in making investment decisions and always consult a reliable source to have the perfect plan in place.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.