Being a father is a challenging role. You are an unsung hero, a coach, an advisor, a leader, and the unfailing supporter of your child.
It is said that by the time you realise that your father was right, you will have a son (child) who thinks you are wrong. If you are in your 40s, this may resonate with you just like it did with me. As you hit middle age, you begin to comprehend some of the life and financial decisions your father took and aim to do the same or better for your child.
The challenge of fatherhood in your 40s is this. On the one hand, you have to secure your child’s future and, on the other hand, look after your father or parents in their winter years—all while balancing your own needs.
This article is dedicated to all those fathers who walk this tightrope with a smile, never seeking appreciation for their efforts. You prove every day that not all heroes wear a cape.
How to plan for your children’s future?
Fathers often strive to provide the best for their children. However, raising a child comes with numerous expenses, including schooling, recreational activities, and the like. So it is crucial you start your financial planning early.
A significant first step towards this is to identify your goals and earmark the amount you need to save. As a father, two significant expenses you can anticipate in your child’s life will likely be higher studies and marriage.
To save money for these two goals, undertake goal-based portfolio construction and an efficient asset allocation. The allocation should be based on your risk appetite. Do all this when your child is still under 10 years of age. This will give you ample time to reach your goals.
Higher education: While saving money for higher education, decide the amount you will need when your child is admitted to college. It depends on your child’s academic choices, university and location (India or abroad).
Consider that you are planning for your child’s overseas education including undergrad as well as postgrad in an Ivy League college in the US. A UG+PG in a country like the US easily costs Rs 4 crore or more given inflation and difference in the currency rates. To save such a significant corpus, you need concrete financial planning in place.
Wedding: The same applies to saving for your child’s wedding. Being a father, the wedding of a child, especially of a daughter, is likely to be very close to your heart. You may want to do everything in your power to be able to afford the dream wedding for your child.
In many cultures, having a certain level of assets such as gold or real estate holds significant importance, especially in the case of the marriage of daughters. Weddings in general are expensive affairs and thus you need to dedicatedly plan to meet this goal.
Observing you planning these finances will also be a lesson in their importance for your child. After all, this is how the baton is passed through generations.
How to take care of your father/parents in the later years?
Being in your 40s, now it’s your turn to play father not just to your children but also to your father/parents.
The two major concerns you may have for your father/parents are likely to be:
i) a regular stream of income
ii) medical expenditure
Regular income: For ensuring a steady income stream for your father/parents, you can choose debt options such as senior citizen savings scheme, senior citizen fixed deposits and government schemes such as Pradhan Mantri Vaya Vandana Yojana. Another investment option for you can be low- to medium-risk mutual funds or other equity tools promising regular income. Systematic withdrawal plans may be used to withdraw money regularly from mutual funds.
Medical contingencies: To look after the medical contingencies of your father/parents, increase his/their health insurance corpus as they grow older. Medical expenses tend to increase for individuals over 60, sometimes due to critical illnesses. These expenses can burn a hole in your pocket if not accounted for during financial planning. Take your father/parents for yearly health checkups and have a sizable health insurance cover to protect them and yourself against any medical emergency.
Planning for your father/parents’ later years will help him/them live a life of pride with independence. It would also keep you worry-free, knowing that they are financially secure.
How to maintain a balance between financially securing your child and father/parents?
Navigating life as a father in your 40s brings its unique set of challenges. You not only have your own life goals to achieve, but you also have to secure your child and father/parents, financially. Investment timing and planning are very critical factors here.
Saving for your children and parents often entails looking at different timeframes and priorities. Therefore, it is better to consult a financial advisor to help you plan for these goals.
Keep both portfolios separate so you can easily track the progress and reevaluate and rebalance them with ease. Spread the portfolio investment across the calendar to make for a smoother investment experience. For example, if you have chosen biannual payments for both portfolios, make sure that the first one has the payments in March and September, and the second one has payments due in June and December.
This will save you from the burden of investing a large amount while helping you be disciplined and stress-free. It is also advisable to do estate planning at this stage.
Conclusion
Much like a soldier, a father is never off duty. However, each year, the cost of living increases with inflation, making your fatherly task harder than it already is. The only solution in this situation is to undertake efficient financial planning. After all, to be a hero for your son or your daughter is not an easy task, right?
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