A child’s growing-up years can be fraught with concerns for parents – be it for his educational needs, physical and mental health, or safety. However, you don’t need a village to raise your child or fulfil his needs, if you have the essential element to facilitate every stage of his growth – proper financial planning.
Here are some common pitfalls that parents face when working out the sums for their children, and how they can be avoided:
1. I don’t need to start saving up early
Depending on the household income level and the desired standard of financial support, you may need to save up before marriage or as soon as the baby arrives. While there is no one-size-fits-all approach, starting as early as possible is always your best bet as it provides ample time and a larger pool of savings.
2. Budgeting is key, right?
Yes, you are right. Take a detailed stock take of your savings and investment portfolios, along with projections of monthly expenses. Also think about your life goals and how these align with your financial objectives. Remember to always factor in child-related expenses while budgeting, especially if you have young children in tow.
3. I want to invest in my children’s future
Before jumping on the investment bandwagon, it is important to have sufficient savings for the family. Apart from having a cushion of about six months of income for emergencies, consider having approximately another six months’ worth of income for any unexpected child-related expenses too.
Stashing away these funds in a savings account would be helpful on rainy days, apparent from the OCBC Financial Impact Survey for COVID-19, which revealed that only a third have enough funds to last them more than 6 months if they lose their jobs during the pandemic. Explore investment options only after establishing a strong safety net for savings.
4. I have enough savings already. What’s next?
With the value of money decreasing over time, the money in your savings account is unlikely to be enough over the next few decades. It is therefore important that you’re working towards charting a worry-free path for your child’s growth.
For a start, ensure that your child’s education fund is all set with Supreme Education, a comprehensive education plan by Great Eastern that assures high guaranteed cash payouts that coincide with your child’s educational milestones. If you’re ready to take your financial planning to the next level, check out GREAT Family Care, a multi-generational Critical Illness term plan that helps you and your family with life’s unexpected challenges.
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These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg).