5 Financial Tips for Father’s Day

Father’s Day is around the corner. While for most commercial companies, it is an excuse to trade a boatload of sappy emotion, you could also consider this day as a reflection of your responsibilities as a father. While taking care of children, money fuels most of the aspirations, and proper financial planning can help make the process better. Read on for 5 financial tips this Father’s Day to streamline your financial responsibilities:

1. Life Insurance

Life is uncertain and death has a nasty way of creeping up on the most unexpected people at the worst times. Today, life insurance is a necessity at least till the time you have financially dependent family members and are still in the earning age. Suppose something unfortunate was to happen to you, you would still want your family to be able to meet the goals that you were all working towards, for instance children’s education. When it comes to life insurance, a rule of thumb is to buy life cover worth ten years of annual income. However, a more scientific method is to calculate either the human value of life or on the basis of your financial goals.

2. Emergency fund

Not all unfortunate circumstances in life end in death. We could run into other mishaps like a loss of job or a prolonged illness. Such events can easily derail our path towards financial goals as you may end up having to withdraw from the partially accumulated funds. This is where an emergency fund comes in handy. Ideally, an emergency fund is a sum of liquid or easily accessible money which would be enough to cover six months of expenses, if the need should so arise. In this manner, even if unexpected small term volatility arises in your life, you can easily tide it over without having to put the brakes on other long-term financial goals.

3. Child-centric financial goals

Financial planning is an extremely important process. A lot of things we want in life today, be it holidays, retirement, children’s education or fancy weddings require enormous spends which are ideally accumulate over years. Make sure you envision your child’s life and how it will be years ahead into the future as well as the expenses it could entail so that you can start working towards it. While for us Indians, often child’s wedding becomes a big goal, ensure your child’s education also remains of paramount importance. One of the best gifts you could give your child is a debt-free start to earning their own bread.

4. Retirement Planning

Did you ever think about how most people our age are the sandwich generation? We take care of our children and we take care of our retired parents. This is one of the facts quite unique in India. However, with proper retirement planning we can avoid having the same fortune fall on our children. Start planning, saving and investing for retirement as soon as you can so that you have a long period of time to accumulate the amount of funds required. In the initial years of setting up their life, having to financially take care of their parents would then be one less thing for your children to worry about.

5. Will

This is probably one of the most ignored aspects of financial planning in India. When we build financial assets in our lifetime, we would also have an estimation of how we would like those to be distributed after our death. However, unless we document it legally, it is easy enough for legal heirs to end up fighting amongst themselves. To ensure the peace and goodwill in the family is maintained even after your death, with rightful distribution of your hard earned assets, make a legal will and have it properly documented.

While Father’s Day should have the sentimental attachment and tags around it, take the time to take stock of the responsibilities also that the role comes with to ensure you are on track to deliver on them without a hitch.