As parents, you will realise how soon time flies. It always gives you great joy to see your little ones grow up so fast. Before you know it, they will be winning prizes at school for academic and extracurricular excellence. From a small sports day prize to their first degree at college, it is you who your kid will run to show, “Mumma, I have achieved something”. Any child in their moment of success or failure would come to you to confide in you their emotion. These small moments are exciting for you as a parent. While they come to you for their success and failures, you as a parent should be prepared enough so that you can ensure their success and pull them out of their failures. The future is uncertain and preparation in this kind of uncertainty is a must. While each of you has your own way of upbringing, finances is where you might need a little support and some handholding. Hence, here are few financial tips as you embark on this exciting journey and smoothen the journey of your little ones as much as possible.
1. Plan Years In Advance
Knowing what your kid might do 20 years from now, is not always possible. What you can do is prepare for them financially in advance. Life tends to throw sudden surprises. For example, you might have a job transfer or your child might choose a career you never expected he/she will. In today’s day, to switch to a reputed school in any of the metros due to change of your city can lead to almost 5-6 lakhs hit out of the blue. If your child decides to join an aviation institute, it can cost you 20-30 lakhs in today’s date. Factor in inflation, you will be surprised how huge you can get hit.
As a parent, you don’t want to say a no to your kid, at least when they say “Papa, I want to be a doctor or Papa I want to pursue music”. Hence, it is always essential to start planning today. Taking care of the present, you might often forget about tomorrow. Therefore set aside a small amount of money every month, without compromising the present so that when the D-Day arrives, you are prepared enough.
2. Spend Only On Things You Need
Our culture and the economic environment these days promote overspending. Keeping your expenses in check amidst such temptation is difficult. Resisting temptations isalways difficult, hence indulge in limited temptations. One of the ways you can keep a tab on this is by differentiating between your needs and your wants. The best method to ensure long-term peace and happiness is to sacrifice short-term gratification. Be aware that your mind can play tricks with you and make you spend money on things that will neither give you joy nor satisfaction. Remember that you are saving up for a better future for you and your children, which makes it all worthwhile.
3. Pay off Loans Before Your Child Reaches High School
For hard-working, salaried people, a loan is a useful financial instrument. It lends us a hand to help us meet our needs, such as sending our kids abroad for higher education, owning a house, child’s marriage, and so on. However, loans can become a burden and trouble your financial lives. Having huge amounts of debt to pay off will start impacting the lives of your children as well as their sense of economic security. To prevent this, it is better to pay off your loan by the time your children become teenagers. In case you don’t plan to do so, make sure, you buy a life insurance along with it so that god forbid tomorrow something happens to you, your dependents don’t face the burden of repaying your loan. When buying a life insurance, I recommend you to look for companies that you can trust with your life savings, like ICICI Prudential Life Insurance.
4. Opt For an Insurance That Is Also An Investment
As a parent, you have the responsibility to save money for future needs. Though you may have your own financial aspirations, having to choose between investment and insurance makes it impossible to chase those dreams, until now. While insurance is quite popular in India, investment is considered risky, and the stigma around it persists even today.
There is an alternative that will free you from this dilemma. By offering the best of both, a Unit Linked Insurance Plan (ULIP) brings together savings and life cover. This provides an excellent opportunity for you to be financially stable and secure the future at the same time. Not only that, a ULIP helps to save taxes of up to 46,800 under section 80C. This ensures you have additional income in hand. A product like LifeTime Classic from ICICI Prudential Life offers all this and additionally offers wealth boosters so that you can further add on to your investment. This ensures no matter how big your child’s dreams are; you have them protected securely.
You want your children’s future to be safe. You also want to be cautious while doing that. By offering a middle ground between insurance and investment, ULIP can be a lifesaver for a parent like you.