Financial planning is one of the most important aspects of life for every individual. This assumes greater importance when you're married with kids. Then, you don't only have to plan for yourselves but also think and plan for your child's future. Ideally, parents should start planning the kids' finances right from the time of their birth. It's very important not to procrastinate on financial planning for children and push it to a later date. Here are some important tips which will help couples to plan their finances well to secure the future of their family.
You should analyse your condition. While many couples may have a decent income, sadly their expenses are also usually shooting of the roof. It's important to keep a check on your spending and thoroughly analyse your financial standing. The moment you start a family, you should secure it for any unfortunate event which may result in a financial havoc. This will take away a huge burden from your head. Buy a good term insurance plan to secure your family. When you are a parent of dependent children, it becomes crucial tp save for them. Planning for your child's education is one of the main concern. With escalating costs, it is advisable to start saving at the earliest and also factoring in the future cost of education, say for 15-18 years from now. Plan your investments in a way that you can get the money at various stages of your child's life – for example, 18, 19, 20 and 21 years.
Beside investment, diversification is important as well. A lot of individuals who invest regularly often forget or ignore the importance of diversification. Diversification ensures that investors can gain varied benefits and do not suffer huge losses, which is quite common if the investments are done in a single source only. So it's always important to distribute the investable amount among different investment options like mutual funds, equity, provident fund, public provident fund, to ensure that your returns are protected.
Create an emergency fund. An emergency fund is one of the most important parts of personal finance and is usually neglected. You should create an emergency fund in the form of savings account funds or even fixed deposits so that you can access them easily during an emergency. This emergency fund should be stowed away safely where it's not at any risk. Try not to access it for leisure or entertainment purposes. Along with this, teach your kids about money. It's important to teach your kids the importance of saving money and equipping them with skills to invest early on. Financial planning, if done well, at the right time and improved with time can lead to great benefits for the entire family.
The writer is chief gardener, at Money Plant Consultancy