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Why Young Parents Should Take Financial Planning Seriously?

25-August-2021 |

Financial planning is the best way to utilize your income towards satisfying your needs and save for the future. It becomes even more important when you become a parent because you will have children depending on your income for their education and other needs. It is your responsibility to align your income for their financial security at different stages in their life. While ensuring their financial needs, you have to allocate a specific fund to save as part of your retirement planning.

To satisfy all the needs effectively and ensure financial protection, organizing your income becomes important and financial planning is the only resort!

Here are a few reasons why young parents should take financial planning seriously.

 

  1. Helps to keep track of your expenses: When you become a parent, your expenses will increase. It may or may not be met with your increase in income levels. Hence, financial planning becomes essential to satisfy the needs of your family.

    Young parents can start with a well-defined budget, including all the major sources of income and expenses. Then, based on the stated expenditure, you can modify the budget based on your preferences. For example, you can exclude a certain expense, postpone an expense to a later date, set a limit for expenses you are unsure of, etc.

    Therefore, dedicated financial planning will help you keep track of the expenses and allocate your income responsibly.

  2.  

  3. Plan for long term financial commitments: When you become a parent, your long-term financial commitments will change significantly. You have to consider the expenses associated with your children’s education at different stages and plan for their marriage, career plans and so on. Without financial planning early in life, these financial goals will suffer.

  4. Ensures protection to your children: Young parents have to consider providing financial protection to their children to ensure their growth is not affected even in your absence. Term plans with a return of premium2 can provide a life cover and a refund of the premium amount paid on maturity if you survive the policy term. It will account for life coverage and savings as well.

    However, if you prefer to extend your savings component, you can always opt for endowment life insurance. There are different types of policies in this regard. A life insurance guaranteed1 return plan can be an ideal solution for people seeking life coverage and a lump sum maturity benefit with different payout options for long term financial goals such as children’s education, retirement etc.

    An effective financial plan will help you include such life insurance policies to plan your finances better.

  5.  

  6. Helps to tackle emergencies or short-term commitments: Most young parents neglect funds for short-term emergencies. However, it accounts for a good chunk of money that might increase the liabilities if not planned appropriately.

    For example, some short-term commitments can be purchasing a laptop for your children, paying for a course for appearing in the entrance examinations etc. Therefore, a financial plan with a good amount of money allocated regularly for such emergencies will help you reduce the financial burden and develop a discipline for saving at a younger age.

  7.  

  8. Helps to save and invest better: As a young parent, if you take steps to decide on a financial plan based on your increasing expenses early in life, it will help you save and invest better. You will have sufficient financial resources to allocate it directly to the financial instruments. You can increase this proportion based on your income to accumulate better savings for your future financial needs.

    An endowment plan with guaranteed1 returns will build a higher corpus when you purchase the plan early and stay invested for a longer term. It will ensure maximum protection for your children. In addition, purchasing life insurance plans at a younger age can also ensure cheaper premium rates. At a younger age, the chances of you having a pre-existing illness and other related health disorders are extremely low.

  9.  

  10. Helps to plan for retirement: Retirement is an important part of life. It is the time to relax and set a peaceful life after fulfilling your responsibilities as parents. However, it is extremely vital to plan for a satisfying retirement life when you are a young parent. It will help you accumulate a larger retirement fund in the long term. And if you opt for life insurance return plans, you can ascertain financial security to your dependent such as your spouse, even in your absence.

    For example, with the guaranteed1 return plan, you can utilize three different payout options. You can avail of it as a lump sum amount, a regular monthly income or as a combination of both based on your requirements. The monthly income plan will be a good option for retirement. Tata AIA retirement planning solutions provide different annuity plans and guaranteed1 return savings insurance plans for your financial needs. 

 
Conclusion

As a young parent, you have important responsibilities to fulfil at different stages in your life. Your child’s higher education, marriage and financial protection in your absence are the primary concerns. A well-defined financial plan can account for these expenses based on your income and future financial goals. It will help you save and invest better, tackle short-term commitments, and plan for your retirement.

Tata AIA Life Insurance offers varied insurance-based solutions that can provide a life cover and guaranteed1 returns to help plan your financial commitments. So, choose a financial instrument based on your needs and income, start saving early and stay invested for the long term! 

 

L&C/Advt/2021/Oct/1755

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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