Are You a Responsible Parent?
The biggest moment of joy in the life of any couple is when they become parents. Addition of a child, is the beginning of a family and can bring immense happiness and love into our lives. However, along with this, another important thing that enters our life is - responsibility. Therefore, while you plan to begin a family, it is imperative to take several prudent financial decisions in the interest of your family's financial betterment. These decisions if left for the last minute can not only harm your finances but also affect your child's wellbeing. Financially security is extremely imperative for the benefit of your little one. Having a child, at a time when you don't have enough funds for his / her expenses can cause mental and physical discomfort to both you as well as your child. Hence, it would be wise to begin saving for this well before the birth of your child.
Although you might be extremely enthusiastic about a new member being added to the family, it would not make any sense to spend too much on things that are hardly going to be used by the child once he / she grows up. Instead of spending too much on the child's clothes, shoes, games etc. it would be prudent to make planned investments for the child's future.
While making investments for your child, don't get carried away by the name of any investment product. Also, don't let the marketing gimmicks of any sales person lure you into investing in any product without analysing it completely. Remember, it is your hard earned money which you are investing for the betterment of your child and it's vital for you do it responsibly!
Also, you must keep in mind that there are several small child related expenses, which when taken together can sum-up to a significant amount, such as day care expenses, nanny's compensation, child's medical expenses, and so on that are needed to be accounted for in your household budget.
You must increase your family's contingency reserves, as sometimes expenses related to children can crop up quite unexpectedly. Remember that, the cost of education has gone up manifold in the recent years and is expected to rise further up in future. Thus, it is necessary that you start saving for this in advance.
You should not delay in making your child the nominee for all your physical and financial assets, as life is uncertain. It would also be wise to write a will, if you have not already done so. Moreover, it is very important to ensure that your life insurance cover is adequate as the entry of a new member in the family means more financial responsibility. In case of your unforeseen demise, your life cover should be sufficient to take care of all your wife's and child's day-to-day expenses and financial goals. Also, remember that, medical expenses have the power to burn a huge hole in your finances. Hence, if you have a family floater health insurance policy, you must include the name of your child in the policy, or take an individual health insurance policy in the name of your little one. It would also be beneficial to increase your and your spouse's health insurance cover based on your needs, if the already existing cover is inadequate.
PersonalFN is of the view that in order to have a stress-free financial life on the birth of your child, all these financial decisions must be taken on time and should not be left for the eleventh hour. You don't want the sweetness brought in your life by the existence of your little bundle of joy, to turn sour due to your lack of awareness or lethargy in making the right financial moves. Be a responsible parent!
PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.
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