I am a father of two wonderful and sweet children. My daughter is 16 years old and son is 8 years old. Even with this, I don’t think I have an authority to provide guidance to anyone and specially fathers. However, basis my experience, I can share few pointers which can be of some help and use.
What I am going to write is totally basis my experience, and I will also reflect where I could have done better, given that now I have an opportunity and option to look back.
Span of any fatherhood can be easily divided into 4-5 stages and financial needs and requirements can also be mapped to these stages given that each of these defined stages would have different needs and fulfillments. Each stage has its own excitement, emotional attachments and needs.
One thing I must suggest, travel international before your child turns 2, as effectively he or she will travel for free and you can very well plan a trip to locations, which is children-friendly (we did that and really cherish that trip till now). This will require some funding, so save for that in advance. Key message.. don’t stop enjoying.
Second Stage is full of some big spends as you have to undergo admission procedures in school and that’s not simple task, starting from selection of schools and then getting admission in your desired school. Admission expenses these days are not small so you have to really plan this at least a year ahead of the D-Day. How you save this big money, I am leaving it you, as it depends upon your style and investment strategy.
This is a phase where you also need to start planning for future and investments like availing a Term Insurance, starting a SIP in Mutual fund and also investment in real estate. You are young and therefore will get a good bargain from Term Insurance, however, keep in mind the future needs and decide on Sum assured accordingly. Sooner you take Term Insurance better it is. Starting SIP is very easy and you don’t need to wait for a right time and you can start from small amount. See, the purpose of all this is to initiate a habit of investment. Another important piece of advice, which I can give, is to keep only one or maximum two credit cards if you want to keep it less complex and easy management. I will also suggest parking certain money for Family travel and message remains don’t stop enjoying your life.
Third Stage is full of challenges as your children have now entered their teenage years, and you can expect questions and point of view on everything. It is also an interesting phase on your personal front as by this time you have reached a good stage in your career. By this time I am sure your expenditure will increase and in case you are planning for foreign education for your children, then you have to keep in mind that expenditure and accordingly plan for that.
Another important area, where I started very late, is planning for retirement. Given that we don’t have social security system in our country and in order to maintain similar life style after your retirement, you need to put some money in pension schemes and there are good schemes available in market.
Fourth Stage – Unfortunately this stage is also full of expenditure. Starting from supporting your child for any business opportunity to their marriages (which I don’t think will go away in India) and as mentioned, planning for this has to happen during 2nd and 3rd stage.
Now you are a grandparent and you don’t want to disappoint your grand children, when they ask for something along with maintaining your lifestyle. So now it’s time to reap the benefits of your earlier decisions and enjoy this phase of life as well. You need to have a separate fund for your medical expenses, which are expected to go up during this stage. I feel that during this stage, most of the assets should be in liquid form, due to its easy conversion to cash.
As mentioned in the beginning, I don’t feel that I am an authority to provide guidance, however, these things so far has helped me. As I have mentioned above, a little planning can save you from running here and there. I would strongly recommend enjoying life at each stage and situation by spending on yourself and family. Enjoy fatherhood and its responsibilities. Happy father’s day to all!
The author is Chief Financial Officer, Canara HSBC Oriental Bank of Commerce Life Insurance.