A lot of parents in India postpone or neglect crucial decisions pertaining to their own futures. Throughout their working career, the focus is almost always on providing the best to their children at every level. This often leaves them high and dry and dependent on their children to deal with their needs post-retirement. Such financial mistakes are common and often perpetrated generation after generation.
New parents are often the biggest spendthrifts. The spending sometimes begins even before your little bundle of joy makes his/ her arrival into the world. Your excitement levels are at their peak and when you enter a shop with baby supplies, almost everything on display seems like a necessity for the little one. But you need to return to ground reality and make the crucial distinction between a necessity and a luxury and incorporate this theory into the making of your budget.
Many people put off the idea of formally making a budget and allocating what percentage of their income needs to be spend where. When the budget is made, it often remains unaltered for long periods of time and action is taken only when things begin to go out of control. Also, decisions are generally made in isolation, without the consent of the other partner.
People further fail to evaluate their financial goals and spending abilities. Many new parents have a four to five-year horizon and do not estimate the amount needed beyond play school. Normally, money doubles in six to seven years, so the parents lose the benefit of compounding. They often forget that they need to plan for the child till the time he/ she is dependent on them.
Focusing on the education and marriage of children is a common phenomenon among Indian parents. You may believe in saving all you can to make sure that your children get to fulfil their dreams of going abroad to study and that your daughter is well provided for during her wedding. “ut providing for your child does not have to be done at the cost of your retirement plans. While this may still be an anathema to a lot of Indian families, many banks offer loans for higher studies and it may not be a bad idea to consider them.
To provide maximum safeguards against risk, most parents today have the tendency to take multiple insurance policies. But you should explore the possibility of increasing the life cover in existing policies instead of going for new policies. Many parents also take children’s policies on an ad hoc basis without exploring whether they will meet the need of the child in future. Also, while you may have a good life insurance cover, you may have forgotten to take a health or mediclaim policy, which will ultimately force you to take hefty sums out of your savings for medical expenses. When people have medical policies, they sometimes forget to include their children in these policies, leaving them exposed in the case of eventualities.
Many lawyers make a quick buck off this folly made by parents. Most parents leave the idea of making a Will for their gray-haired years. For the moment, they often feel that a nomination will serve the purpose. While nomination allows the nominee to receive the proceeds, it does not make nominee owner of the proceeds. Also, not leaving a Will paves way for a lot of legal and unwarranted disputes among family members.
The bottom line, however, is that you don’t have to feel selfish if every financial act that you indulge in does not seem to visibly benefit your child at the moment.
- OVERSPENDING
New parents are often the biggest spendthrifts. The spending sometimes begins even before your little bundle of joy makes his/ her arrival into the world. Your excitement levels are at their peak and when you enter a shop with baby supplies, almost everything on display seems like a necessity for the little one. But you need to return to ground reality and make the crucial distinction between a necessity and a luxury and incorporate this theory into the making of your budget.
- PUTTING OFF PLANNING
Many people put off the idea of formally making a budget and allocating what percentage of their income needs to be spend where. When the budget is made, it often remains unaltered for long periods of time and action is taken only when things begin to go out of control. Also, decisions are generally made in isolation, without the consent of the other partner.
People further fail to evaluate their financial goals and spending abilities. Many new parents have a four to five-year horizon and do not estimate the amount needed beyond play school. Normally, money doubles in six to seven years, so the parents lose the benefit of compounding. They often forget that they need to plan for the child till the time he/ she is dependent on them.
- NARROW FOCUS
Focusing on the education and marriage of children is a common phenomenon among Indian parents. You may believe in saving all you can to make sure that your children get to fulfil their dreams of going abroad to study and that your daughter is well provided for during her wedding. “ut providing for your child does not have to be done at the cost of your retirement plans. While this may still be an anathema to a lot of Indian families, many banks offer loans for higher studies and it may not be a bad idea to consider them.
- INSURANCE FOLLIES
To provide maximum safeguards against risk, most parents today have the tendency to take multiple insurance policies. But you should explore the possibility of increasing the life cover in existing policies instead of going for new policies. Many parents also take children’s policies on an ad hoc basis without exploring whether they will meet the need of the child in future. Also, while you may have a good life insurance cover, you may have forgotten to take a health or mediclaim policy, which will ultimately force you to take hefty sums out of your savings for medical expenses. When people have medical policies, they sometimes forget to include their children in these policies, leaving them exposed in the case of eventualities.
- DELAYING YOUR WILL
Many lawyers make a quick buck off this folly made by parents. Most parents leave the idea of making a Will for their gray-haired years. For the moment, they often feel that a nomination will serve the purpose. While nomination allows the nominee to receive the proceeds, it does not make nominee owner of the proceeds. Also, not leaving a Will paves way for a lot of legal and unwarranted disputes among family members.
The bottom line, however, is that you don’t have to feel selfish if every financial act that you indulge in does not seem to visibly benefit your child at the moment.
