Sunday 18th June is Father’s Day in many parts of the world. Becoming a parent changes everything, not least your financial priorities. Here are some must-do financial planning tips for fathers (and indeed mothers!) everywhere.
First of all, Infinity would like to say Happy Father’s Day to all you wonderful dads out there! We hope you are spoilt rotten today. In this article, we give you some financial planning tips to set your children up for a financially secure life. It’s important to have an effective plan, especially if you are an expat.
The importance of financial planning for dads
When you have a child, you assume a responsibility that is not to be taken lightly. Worry becomes par for the course for parents. And mums and dads don’t just worry about the health, happiness and well-being of their children in the here and now.
The world is becoming an ever-more hostile place. The cost of living is rising, job insecurity is a fact of life and young people face a world plagued with problems related to climate change.
It is easy to feel helpless as a parent when there are so many challenges to face but there are some concrete actions dads can take to help prepare their children for a secure financial future.
Here are our top five financial planning tips for dads.
Start an education fund
A good education is one of the greatest gifts you can give your child. And often that means paying for it. Whether you are a dad to a newborn who will one day attend an international school or an older child who dreams of studying at university, the fees are going to be a major cost that needs building into your financial planning.
An education fund is a great way to spread the increasing cost of a great education. A regular savings plan is the perfect vehicle for building up capital. Start it as early as you can – some people start before they even become parents! – to maximise the effect compound interest has on your savings. Infinity has a wealth of experience in helping expats in Asia fund the very best education for their children so do get in touch to find out how we can help you.
Get your life insured
Protecting your loved ones against the unexpected is another fundamental part of financial planning when you are a father. Becoming a parent is often the trigger for getting life insurance in place (although we usually recommend putting it in place before that) to ensure that whatever happens to you, your child will be financially protected, and their standard of living maintained.
It’s not always easy to calculate how much life insurance you need, and many people are underinsured. You’ll find some useful info to help you work out the cover you require here. Even better, consult your financial adviser who will be experienced in working out life insurance requirements for expats in Asia.
Write a will
A will is the only way to ensure that your assets go to the people you want them to after you die. If you don’t have a will, your loved ones could inherit a whole host of problems such as an overly long probate process, heirship disputes, the loss of a home, or an unnecessarily high inheritance tax bill.
In addition, parents should ensure that they nominate guardians for their minor children. Should the unthinkable happen and your children become orphans you don’t want a judge deciding what is in their best interests.
Prioritise your retirement
We all want the best for our kids and it can be tempting to spend all your disposable income on them but you must continue to prioritise your retirement. When children reach adulthood they have options to borrow to fund further education or buy their first home. Parents, however, don’t have easy solutions to deal with a shortfall in retirement savings in later life. It’s imperative to balance spending on your children with saving to accumulate a pension pot that will afford you a comfortable retirement.
Teach your child the financial basics
One of the greatest gifts a parent can give a child is to teach them money management from an early age. These skills are neglected in schools despite the fact that good financial management can significantly impact our well-being. Modeling good financial behaviour, showing the importance of saving, and educating your child about concepts such as compound interest and how it relates to both debt and saving will all help to establish healthy financial habits to carry into adulthood.
Being financially responsible for a child can be overwhelming. If you are an expat in Asia and you’d like some help devising a financial plan which balances your needs and those of your family, one of our professional advisers across Asia would be happy to help. A no-obligation chat is just a click away.
A leading provider of expat financial services and wealth management services across Asia.