Financial mistakes every parent must avoid
When it comes to your children, the sky's the limit. A part of you wants to shower them with all the luxuries in the world - everything you didn’t get, and then some more. But at what cost? Where do you draw the line? How much is too much, and how little is too little? You don’t want them growing up to be irresponsible with money - or too frugal. You want to provide them with a safety net - but not so much that they become dependent on it for survival! What to do?!
As a parent, it is your prime responsibility to secure your children's future by investing in the right savings plan and insurance. A child investment plan comes with numerous benefits like healthcare, education, and, most importantly, long-term financial security.
If you’re a new parent, you will be overwhelmed with advice. While some mistakes are inevitable, others are not. So here’s our list of four financial mistakes to avoid as a parent!
Four financial mistakes every parent must avoid:
1. Not preparing a budget - and sticking to it!
When you have kids, you’re in it for the long haul. Although every parent wants to fulfill all the desires and needs of their children, unfortunately, money matters don’t always allow that. Granted, there's nothing wrong with spending on fancy stuff for your children occasionally, you must remember that as your child will grow, so will the expenses. And then, there are crisis situations that’ll come knocking on your door - you need to be ready for it!
Hence, strategic planning is the key to a financially secure future. When you create a budget, you are better equipped to build a safety cushion for your family. After all, you cannot take risks when you have a baby depending on you. A monthly budget will not only help you plan your expenses wisely and monitor them, but it will also allow you to save for all sorts of emergencies - including medical, financial, personal, a sudden job loss, or in times like these, unprecedented pay cuts.
2. Pushing education to the backseat
The challenges of running a home, taking care of your family, fulfilling your responsibilities as a parent are both multifaceted and never-ending. While parents get busy managing and providing for the needs of their families, they often forget to start planning for one of the most crucial things - their children's higher education.
The primary thought process behind not saving for children’s higher education is - “Right now they’re too young. We’ll cross that bridge when we get there.” This attitude needs to change. The thing is, years will pass by in the blink of an eye, and before you know it, it’ll be time for your kids to go to college. And with ever-increasing globalization, the world is their oyster. An education abroad vs a government university in India, or even a private college one for that matter, can mean a difference of many years of savings - are you prepared for that?
The best gift you can give them is to set up an education fund so that they can choose their desired career path without worrying about monetary constraints. While an education loan is an option, the interest rates are pretty steep. So, the best course of action is to invest in a child investment plan that covers your children's healthcare and education requirements.
3. Not encouraging the habit of saving money
While most of us don't realize it consciously, the roots of our money spending and saving habits go back to the two foremost influencers of our lives - our parents. Growing up, it is natural for children to learn from their parents and imitate their habits. However, in a typical Indian household, the general propaganda is “Kids don’t discuss money matters.” Usually, parents teach their children not to worry about money from a very young age. This tradition or viewpoint can no longer hold true in today’s world.
If you don't teach your kids about money, how to spend it wisely, and how to save for the future, they'll face immense difficulties in the real world later. Financial literacy is the need of the hour. Without basic financial literacy, your kids will find it challenging to balance checkbooks, plan monthly budgets, and of course, save money. Thus, whenever you see a chance to teach your children about money, take the opportunity to teach them about how to manage their money. By doing so, you will ensure that your children are not overwhelmed by tax, insurance, and investment matters.
4. Ignoring life insurance for children
Our current Covid times are proof that we can’t predict disaster (or a pandemic!). It is always wise to be prepared for it. A life insurance plan is one such step that can protect your family against the uncertainties of life. The goal of life insurance plans is to provide financial stability to your family in case of an unforeseen event. It serves as a sort of a guarantee of the financial future of your loved ones if ever you’re not around.
Furthermore, life insurance plans are tax-deductible, which makes them an ideal investment for you. The bottom line - investing in a life insurance plan is a practical decision that will protect your family and cater to their financial needs in case of any unfortunate or unexpected circumstances.
Nobody can prepare you for being a parent - you must gear up for the responsibilities one step at a time. The key to being a successful parent is to strike a subtle balance between love and control. Love your kids with all you've got. Make sure they never lack any necessities that they need to move forward in life, but also ensure that you never lose control of the bigger picture - securing a promising future for them. And with these key tips on financial planning, we hope that it becomes a bit easier to navigate parenthood.
If you want to create a foundation of financial safety and literacy for your children, start planning now!