Often, fathers are the unsung heroes; they believe in you when you do not, they guide through every hurdle of your lives. Father’s Day is celebrated across the world to appreciate the wondrous selfless household heroes who we call fathers. Growing up you learn innumerable skills from your fathers be it driving, gardening or being calm in the most turbulent situations. One of the skills you miss out on is taking care of your finances, which is the ability to understand and effectively use various financial skills.
Father’s Day, on June 20, has come at a time when the world is going through an unprecedented crisis, economies are straining to recover, businesses are struggling to reopen, and individuals are trying to survive job losses, pay-cuts and financial hardships. One way to celebrate this day would be to recall the financial wisdom imparted by your father and use it to make the right choices and come through these difficult times.
Here are top financial lessons to imbibe from fathers for the benefit of families’ secured future.
No matter how hard you work or how much you earn, it is quite unlikely that you can save or invest without a proper budget. Living within means inculcates spending discipline, ensures better financial health and influences sound financial decisions. Taking stock of your income and prioritising expenses such as EMIs, rent, childcare, groceries, utilities, etc. is essential. In the COVID-19 era, especially, a fixed budget can enable us to keep tabs on our income, expenditure, and savings, and help see us through this or any crisis.
It all started with the piggy bank when fathers would give their children a coin, usually of a particular denomination, over several weeks or months. As they grew up and started working, fathers advised their children to set aside a portion of their income every month and use it for shopping, home renovation, a holiday or an emergency. The lockdown has offered most people a chance to reduce unnecessary expenses, or discretionary spending, and save for a time when it might be needed the most Eventualities such as job medical emergency, job loss have become a reality for many in this era which should act like a lesson for all.
Unplanned debts can spoil anyone’s financial health. This would have helped you assess your needs for taking a loan by making a choice between necessary expenses and the irrelevant ones. It is crucial to avoid unnecessary debts and stay away from the burden of a high EMI. Debt should be opted to accomplish a financial goal. It is important to understand the difference between a good and bad debt. Managing debt by keeping track and paying EMIs and bills on time should be a habit to avoid uncertainties.
Fathers never fret in turbulent situations because they always have a plan B ready, and it is necessary to learn from them and take all actions to ensure financial security. Opting for term insurance is a great way to start in case of any unfortunate circumstances, it is the safety net for family as they provide death benefits apart from regular income to the policyholder or the nominee. Choosing a term plan with regular income, or pension after a certain age, could be an ideal option. To nurture financial independency, parents must encourage children to plan ahead, set milestones and work towards fulfilling it.
The piggy bank is a perfect analogy for financial planning or setting financial goals from a young age. It inculcates the habit of savings and investment, and sets long- term, albeit realistic, goals for the future. At the barebones level, investments are nothing but savings that are craftily converted into higher return paying options over a relatively longer period. Most fathers suggest, it would be best if you spread your savings over different investment avenues to minimize the effect of volatilities. Various options available are direct equity, mutual funds, government schemes like NPS, PPF and Banks fixed deposit schemes.
One thing fathers do not talk about is retirement plans because it seems far-fetched, but retirement arrives much sooner than one expects. It is advisable to start investing in a Pension scheme or a guaranteed income plan at a young age to be financially independent after retirement.
Busy looking out for families, fathers usually do not plan for themselves. Parenthood prompts them to start planning right off the bat, draw up plans and set goals for their children. However, children are sometimes excluded from this. Your father is still your best teacher. It is your responsibility to learn financial planning and ensure to maximize the savings and make the right decisions for a secure future and retirement.
The author is Head of Marketing, Aviva India. Views expressed are personal.