Covid-19: How can parents streamline their finances amid second wave

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Child’s education is one of the most important expenses that parents factor in while setting financial goals. Due to the Covid-induced economic disruption, employees across most sectors witnessed job losses and pay cuts. Considering the uncertainties that all of us are going through during the pandemic, it has now become important to streamline the family finances efficiently.

Rishab Mehta, founder and CEO, GrayQuest shares some quick tips for the parents so that they deal with their financial matters better in the current scenario-

Waste no time: There is no better time than now to take a hard look at your finances and prepare a plan for a much secure future. For example, saving for your child’s education is a long-term goal and requires proper planning. The best time to begin is when the child is born. The impact of compounded growth would make it possible to achieve this aim with small, timely contributions.

Actively manage your finances: Financial planning is of critical importance. Income, expenses, savings, investments etc. needs to be aligned with the family’s short-term and long-term goals. Financial planning helps one stay in charge of any exigency that arises. It is also important to actively review and revise your plans, and implement changes in tune with changing needs of the family. Especially when it comes to planning for your children’s education, parents who review and modify their child’s education fund planning as and when required, are more likely to account for the factors that may erode their potential savings for the child’s fund in the future.

Go for easy monthly payment options for your children’s education: There are innovative financing models available to reduce the fee payment burden on parents. These services are accessible, affordable as well convenient for the parents thus helping them manage their finances in an efficient manner.

Build an emergency fund before investing money: An emergency fund can help one stay afloat in times of a financial crisis such as the current one. Emergency funds should contain a minimum of six to twelve months of family income. Also, this fund should be quickly and easily available as cash, if and when required. Efficient financial management requires one to be very careful before making any large investment if it’s a significant proportion of your family budget. Therefore before making any lump sum investment for your child, always check if there are alternatives available that lead to the same desired goal but through bite-sized investments.

Diversify investments: A basic rule for successful investing is to diversify your investments across different asset classes such as debt, equity, gold, etc. This helps not only to reduce risk but also to optimize returns. It also essential to keep the investment duration and goals in mind when choosing financial instruments. For example, to be better equipped for your child’s future, parents should ensure that they cover each goal with a separate plan to ensure they invest enough to secure their child’s future. They can take up separate term plans to safeguard important goals. This will increase the probability of achieving each goal significantly.

Life & Health Insurance are crucial: The pandemic is proof of the fact that life can be unpredictable. Thus, ensuring the financial security of your family should be your top priority. Investing in a life insurance plan will help in ensuring adequate coverage for the family. Good health is a basic necessity for everyone and especially with Covid impacting the health of family members, health insurance for the family is a must too. Such insurance coverage also helps in the protection of your children’s future in case of any unforeseen event.