As a father, the financial security of your family is something that you must try to accomplish in the near future while striving towards your life goals continually. Whether you are/are not the breadwinner of the family, you should attempt to financially secure your loved ones from the impact of emergencies and mishaps like your demise. At the same time, you should strive to ensure that they can achieve their future objectives and maintain their lifestyle at the same time.
So, what should you do in this regard? Here are some simple steps that you can consider taking.
Father Protects Family- Simple Steps Worth Taking
Here are a few steps to for a father protect family with the help of strategic decisions. Some of them include the following:
- Proper Budgeting– You should first budget your monthly or yearly expenses in order to spend money in a smarter way. This means classifying expenses under multiple heads. Once you’ve got the necessities out of the way, the rest has to be prioritized as per your future goals. This may often mean putting off something for later, something that is a lifestyle preference/indulgence/desire. However, patience can have its own sweet rewards, as is often seen in the world of finance and savings.
- Building an Emergency Corpus– One of the best ways to ensure financial breathing space is to create an emergency fund. This rainy day corpus is what will help in case of sudden expenses, emergencies, job losses, and so on. You should aim for at least 3-6 months’ worth of your monthly income to start with. Later on, you can build it up to 1-2 years of your monthly salary, keeping inflation in mind. However, investing smartly is the key to getting decent returns on your savings while not compromising on liquidity.
- Proper estate planning– What’s the use of financial prudence and future savings if it leads to future disputes among your beneficiaries or they do not get the benefits of the same in a timely manner? You should start estate/legacy planning at the earliest, encompassing your will, gift deeds, trusts (if you wish to preserve money for everyone without putting it directly in their hands), tax planning, and so on.
- Suitable insurance coverage– Term insurance is the first thing that should be added to your portfolio. In an ideal scenario, you should aim for coverage worth at least 15-20 times of your annual income. However, you should always add your debts/liabilities, future goals like higher education and weddings, and your family’s monthly expenditure (after accounting for inflation) before choosing this amount. This works as a major financial safety net for your family in case of your sudden demise.
The next thing to do is purchase adequate health insurance as well. This will give you financial security in case of a medical emergency while ensuring quality healthcare and treatment alongside. It will not deplete your savings and investments, which is a major boon, to say the least. Try to get more coverage at a comparatively lower rate for the entire family while selecting add-ons if they are needed, like accidental death and disability, critical illness, and so on. If you already have coverage, increase it once you get married and if/when you have a child.
- Long-term investments– The final thing to do is start investing for your long-term goals. These should ideally include building a retirement corpus, funds to cover the higher education of your children and goals like home purchases, and overall wealth creation. Diversify your portfolio, with a mix of investments like ULIPs (that offer market-linked returns with life coverage), ELSS and other mutual funds (via SIPs), and comparatively safer options like fixed and recurring deposits, PPF, and so on.
Build your portfolio based on your risk appetite and future goals, while staying committed to your investments despite temporary fluctuations. Make sure your portfolio is tax-efficient (by maximizing deductions under the Income Tax Act) too. Options like gold and real estate also serve as a hedge against inflation in some cases.
To sign off, it can be said that safeguarding your family’s financial future is something that you should not take lightly as a Dad. Follow the above-mentioned tips to get started today!
