Millennials have grown up in an age of incredible technological advancements and have conformed to constant connectivity through the wonders of the internet. Now that millennials are getting older and raising families, the curiosity of their parenting style persists. While parenting is one of the most profound joys in the world, it brings with it a whole set of responsibilities – financial and otherwise. Unlike the Baby Boomers and Gen X, millennial parents and especially millennial mothers will have to make smarter financial decisions to secure a future for themselves as well as their children.
Whether you already have children or have one arriving, creating a financial plan, and setting a long-term goal should not be put on the back burner. Chalking out a financial plan that covers you and your child’s journey for at least a few years at a time should be the first step. Millennial mothers today are tasked with fulfilling a range of childcare expenses including vaccination, childcare, academic feeds among other expenses. This makes it important to carefully understand and plan your income and expenses and curtail expenses where necessary and impose financial discipline in all your spending.
It is never too late to start planning and here are some simple steps that can get you started on this financial journey as a millennial mom.
Get a crystal-clear view of your spending
Raising a child is an expensive affair. Everything from educational expenses to extracurriculars can end up burning a hole in your wallet. Millennial moms should easily be able to categorize their discretionary and necessary spends. This will help in planning both short and medium-term expenses while measuring them against your monthly earnings. There are multiple applications and websites which can help you track your expenses and create a financial plan.
Financial advice, please.
Proud as you might be of your mental maths skills, investing can be a complicated process. The number of policies or plans on offer, the terms and conditions to fulfil each, and the need for drawing up an investment plan- all these can serve to overwhelm you with sheer information. A financial advisor will cut through the clutter, evaluate your position, and help you get the plan you need.
Build an emergency fund
Put money in a savings account to ensure you have an emergency liquid fund. Millennial moms should aim to save anticipated living and child-related expenses for the next six to nine months. Ensuring financial discipline by limiting frivolous spending habits and setting goals is crucial to meet this goal. Saving a small amount every month will help you build this emergency fund and serve as a safety net in times of need.
Optimism is good. No backup plan isn’t: Evaluate your insurance
Being a young mother means your earning potential is your greatest asset. While you march towards fulfilling your dreams, the last thing you want to worry about is funds for healthcare expenses for a loved one. It has become a necessity, especially in the times we live in. Most people end up thinking that it is something they will get to later in life. However, it is crucial to have good life insurance and health insurance plan to avoid any financial pressure on your family in difficult times.
Tomorrow Should Mean Now!
With age on your side, start early! Life Insurance is best bought early, indeed, best bought NOW. Allowing your funds to build with time will provide support when you need it. The simpler fact that prevails is that insurance premium depends on the age at the time of entry and remains the same throughout the policy period, so earlier the better! While tomorrow certainly is inevitable, it won’t do so at the same price!
Prioritize your financial obligations
Strike the right balance between paying off debt and constructing a retirement fund. If you are a millennial parent with serious debt, you can work on eliminating a substantial part of your debt first and then balance your disposable income between debt and future savings.
Don’t put all your eggs in the same basket
While millennial mothers are young and can afford to make risky investments, it is also important to make zero to low-risk investments like government bonds, Mutual funds, fixed deposits, etc. Diversifying your income into a broad portfolio will ensure that you are always taking calculated risks. It will also safeguard your child’s future and ensure you have an opportunity to grow your portfolio exponentially.
The addition of a child into one’s lives also requires a significant adjustment to one’s relationship with money. Millennial moms are tasked with making smart money choices to ensure they are well equipped with the necessary financial resources to take care of themselves as well as their children. A digital native and a well-informed being, millennial moms have greater purchasing power and by making smart financial decisions, they can ensure a financially secure future for themselves and their children.
By, Peuli Das, Chief and appointed actuary, IndiaFirst Life Insurance