Here are tips from three experts on how mothers can manage personal finance well enough to secure the future of their children.
Deepali Sen, founder, Srujan Financial Advisers LLP
Raise money-conscious kids: As moms build the foundation for kids’ financial understanding, you need to emphasise from a very early stage that money is not an entitlement. It needs to be spent prudently.
Retirement stands taller than kids’ higher education: If you have to choose between building your retirement nest and funding higher education, do the former first. Children can always take an education loan.
Build an emergency fund: Mothers are the hubs for so many activities (spokes) originating through them. Set aside 4-5 months of expenses in a liquid/ ultra short fund.
Protect yourself: Take adequate life cover. Take a term plan for the amount of present value of all your forthcoming goals.
Money is one of the highest forms of energy: To make it productive it has to be self-sufficient, that is ahead of the two robbers—inflation and taxes. Plan your goals to avoid any kind of negative surprises.
Priya Sunder, director, PeakAlpha Investment Services Pvt Ltd
Don’t get into credit card trap: Credit cards are great to track expenses and offer the flexibility to spend now and pay later. But be wary about getting into a credit card debt trap. If you can’t pay your bills on time, the interest rates on outstanding balances are prohibitive.
Try to clear debt faster: Free yourself from fixed payment commitments such as equated monthly instalment if your income stream is not steady.
Take some risk: If your children’s education goals are 10 years or more away, don’t stifle the growth of your money by investing in conservative instruments. Investing in equity mutual funds via systematic investment plans is a good option.
Adequate medical insurance: Have a high health insurance cover in place, so sudden outflows of money do not derail your investment plan.
Liquidity is a must: Liquidity in the portfolio is often ignored. Do not lock-in a large proportion of your assets in illiquid assets such as real estate. Else you will end up in a situation of being asset rich and cash poor.
Dilshad Billimoria, director, Dilzer Consultants
Education is expensive: Inflation on education expenses are high and, therefore, provision should be made by investing in an SIP or RD every month to meet the annual payout (normally between April-June every year).
Get real about marriage: Give lower priority to marriage and first ensure your kids are able to stand on their own feet – independent and financially stable to start a life of their own.
Do not give kids a silver spoon: Parents plan to leave an estate bigger than what they own for their children. Help your children realise the value of hard-earned money.
Let your child learn: After a certain age, let your kids learn their own way. Stumbling, falling and getting up is how they learn to walk. That’s also how they will learn to manage money problems and take decisions.
Instil discipline: If you are planning for their future, make your child aware and start an SIP or RD for as low as 500 a month – any amount that will instil discipline and build the habit of saving.[“Source-livemint”]