Money management mantras for would-be fathers

On the occasion of Father’s Day, we asked financial planners their money management mantras for soon-to-be-dads. Here is what they have to say.

Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors

It is interesting to delve into the mindset of a ‘father-to-be’ as he is both excited and nervous about this phase of his life. A flurry of thoughts is crossing his mind about his financial profile, and also his outlook and behaviour towards life in general.

Once this initial excitement settles, a sense of sudden maturity and comprehensive responsibility takes over. At times it is seen that some individuals tend to ‘overthink’ this aspect, which sets them on the path of making wrong decisions in life and their finances as well. Remember your spouse needs you to be with her during this phase and hence you need to have an efficient ‘work-spouse’ balance.

Also Read: A father’s basic financial toolkit

Financial security is of paramount importance to your family at this stage and thus it is imperative that you are adequately covered through a term plan insurance policy. Do not fall for the traditional ‘child’ policies at this stage or in future as well. Think equity as a medium for long-term wealth creation for your child rather than the conventional gold and real estate. To sum it up, imbibe ‘financial awareness’ within yourself and then within your family.

Dilshad Billimoria, certified financial planner and director, Dilzer Consultants

There is no better feeling in the world than to see your own design in life form! Becoming a dad brings about both relationship, behavioural and financial changes in a family. For dads-to-be, it’s the anxiety, hope, fear and finally pride of being responsible for a new entrant into the world.

Planning for a new baby can be disruptive and yet the most satisfying and enjoyable feeling. Understanding what is in store, is half the battle won.

Preparations for the first-year expenses of a newborn should be planned carefully. That’s because costs like medical expenses for the baby and the mother, external help, food and lifestyle changes all happen at once. Make sure your health insurance is up-to-date for both parents. An emergency corpus at this time is a must as other than increase in monthly expenses, the mother may plan to take a longer break.

Also Read: How about an unusual gift on Father’s Day? Emulating his financial habit

The financial adviser should also factor in extensive leaves that both the parents would take and plan for all committed savings to be serviced through the emergency fund created. Post-delivery, mothers go through psychological, emotional and lifestyle changes. Understanding and accepting these changes can make the situation calmer at home.

Deepali Sen, a certified financial planner and founder of Srujan Financial Advisers LLP

In terms of expenses, not much changes initially as the cash and other gifts buy you most of the essential items. Therefore, shop sensibly and avoid buying more of the same. Even the doctor’s visits, vaccinations could easily be accommodated in the monthly expenses as the hike will not be more than 3-4%. The highest increase in monthly expenses could be due to a nanny’s salary, which can be balanced out with eating out and entertaining reduces.

Focus on increasing the emergency corpus by 10-15% and also factor in the reduced income in case either parent decides to take a sabbatical. Make sure you have life and health insurance policies and include your child in the health insurance plan.

Start planning for your child’s education--the earlier the better. Bracket the needs into playschool, nursery, pre-primary, primary, secondary education and, higher education costs at a much later date. Estimate the costs needed at various dates; you could invest in medium-term debt funds (for needs between 2 and 7 years) and in diversified equity funds meant for the long term for education-related goals emerging after 7 years. Monthly investments through systematic investment plans (SIPs) would be the best bet for accumulating money for these goals. So start cultivating the discipline of saving every month.

At last, do not slacken on the need to build a retirement corpus. It could be risky to lose sight of one’s goals in light of a new one emerging.

Shyam Sunder, managing director, PeakAlpha Investment Services Pvt. Ltd

Most men have a strong “Peter Pan” streak in them, and stubbornly hold on to their boyhood. Becoming a father is perhaps the last milestone in the journey from boyhood to manhood. For the first time in your life, you have someone almost completely reliant on you for their every need. There are many things we discuss with fathers-to-be in their financial plan. But the most important would be to ensure you are adequately insured.

It may seem strange, even morbid, to bring up insurance at this exciting and joyful moment. But insurance is all about planning for events with ‘low probability, high impact’. You need to insure your income stream if there are others financially dependent on you. The newborn is probably the clearest definition of such dependence. For a skydiver, the difference between terror and exhilaration is the parachute. Adequate insurance is the parachute that gives the father confidence about the child’s future in the face of life’s uncertainties.

Yes, there is detail, in terms of what insurance to buy, how much you need, and the rest. Any good adviser can help you work through these. But don’t postpone this responsibility. Engage, understand, decide, and act. Happy Father’s Day!