Your tiny new family member is a joy to behold. A baby, on the other hand, carries with it a whole new set of duties. It’s also not an option to put the baby’s health on hold. This entails taking equally good care of your cash. However, many new parents fail to consider long-term financial concerns. And this is a huge blunder.
Here are the four most common financial mistakes made by young parents:
Savings for retirement should be frozen: Your newborn becomes the centre of attention for everyone. The little one is at the centre of all your major decisions, including financial ones. But don’t forget to save up money for the future. If you don’t start saving for your retirement now, you may find yourself in financial trouble later. It is not a good idea to rely on your child to support you in your old age. Invest a lump sum amount in a Child Fixed Deposit for the long term if nothing else. Then, when the investment matures, keep reinvesting the money.
Putting off preparations for higher education costs: Your child is now a baby. Higher education may appear to be a distant dream. However, any parent will tell you that the years fly by before you realise it! You will never go wrong if you begin planning early. Keep in mind that the cost of schooling is spiralling out of control.
As you work to provide the baby a pleasant life, make sure the future goes smoothly as well. Invest now to reap the benefits of compounding. Time might be your best friend if you get started early. The interest earned on your investments would be compounded. This would accumulate into a sizable corpus over time.
Taking emergency money for granted: A crisis can occur at the most inconvenient of times. When you have a baby to look after, you are more vulnerable. Even if you’re spending a lot of money on a pram for your infant, save a bit in an FD.
Do this on a regular basis and use it as an emergency fund. If you decide to have another kid, the fund could even serve as a safety net during the new mommy’s unpaid leave.
Saving money on life insurance: New parents sometimes ignore the importance of life insurance. The birth of a child significantly increases your expenses. Don’t, however, make the mistake of skimping on life insurance. Rather, even if it is a strain on your money, make sure you have adequate life insurance coverage. In your absence, your spouse should not have to struggle to raise the child.
FDs can serve as a financial safety net.
Your bills may be emptying your bank account now that the baby has arrived. Invest in an FD on a regular basis until you can get a grasp on your costs. Bajaj Finance offers FDs with tenors ranging from one to five years for as little as Rs.25,000. There are three major ways in which young parents can benefit:
Fixed-income investments (FDs) provide a guaranteed return at a set interest rate. FD Interest Rates of 7.85 percent are now available from Bajaj Finance (the rate goes up to 8.1 percent for senior citizens). Market fluctuations may cause your return to fluctuate, but they will have no effect on your investment. With the help of your FD investments, you may support your child’s higher education if you prepare ahead. It is not necessary to take out a loan.
When you’re in a financial emergency, FDs can come in handy. Make a habit of receiving interest payments at regular periods. In times of financial stress, this can help you increase your cash flow. You could also take out a loan against your FD. You can borrow up to 75% of the deposit amount from Bajaj Finance. The loan has a decent interest rate, which is only 2% higher than the fixed deposit rate.
Flexible payment options: You can let your interest accrue during the term of the loan. This is useful if you wish to save for a future goal, such as paying for your child’s college tuition. You could also take out the interest on a monthly basis.
All of a new parent’s energy is focused on providing the best for their child. But don’t forget to save for the future. Start investing today to ensure your child’s future is worry-free.