Common Parents’ Money Management Mistakes
Every parent wants the best for their children, from education to employment, to falling in love and starting their own family, or finding their passion in life. Most, if not every parent, want the same thing – for their beloved children to grow up happy and healthy. However, it’s not easy to always give them the best while juggling every aspect of life. There could be times when parents focus too much on their children’s wellbeing and successes that they end up sacrificing their own well-being. One such area is when we make “parents’ money management mistakes”, thinking that we matter less than the children.
Neglecting your own financial future as you frantically plan for your children’s is one of the most common financial mistakes parents tend to make. While your child is well covered for, are you? It’s easy to neglect your own planning when you’re busy planning for the mini you(s). Failing to do so can cost you and your family big-time in your retirement days. Unfortunately, with financial mistakes, there are no second chances, so here are some common mistakes you and your partner may wish to avoid early on!
01 IGNORING YOUR RETIREMENT
The need to splurge on your children’s needs, from school fees to daily necessities is understandable; but it should not eat into your own retirement budget. One key money management mistake we make as parents is in taking ourselves out of the importance equation, instead of striking a balance between self and children. It may still seem far off to a parent of young children, but it takes a lifetime to accumulate adequate funds for retirement. Hence, don’t make the mistake of overindulging your children at the expense of investing in your own future. Getting an early start to your retirement savings gives your money the opportunity to grow, and will help you avoid becoming financially dependent on your children when they are older.
Pro tip: Instead of saving your money into traditional banks, why not try investing? it helps to beat inflation and has the potential of generating higher returns for yourself. Investments may include a range of choices from stocks to bonds to mutual funds and many more. Depends on your income, age, and risk tolerance, choose an investment tool that best suits you. More tips and trips in our 101 Guide to Investing!
02 NOT BUYING ENOUGH LIFE INSURANCE
Of course we hope this does not happen but life is full of uncontrollable situations! Another common money management mistake we make as parents is insufficient planning ahead for unforeseen circumstances where we do not exist. It is not too hard to imagine what can happen if a parent dies with inadequate life insurance coverage. In most cases, the surviving parent has to work harder and longer to continue to take care of the family. And without adequate funding, much financial planning would be disrupted along the way. After all, there is simply much lesser money to go around in a one-parent household.
Let’s also not forget critical illnesses or fatal accidents that could happen to anyone. Preferably, you would not want to rely solely on your emergency funds to pay for all these expensive medical expenses. If you had bought insurance plans, a significant percentage of the bills would be covered, hence relieving the financial stress on your family/spouse.
Pro Tip: If you would like to get an idea of how much life insurance is need, you can always try using a life insurance calculator. While we know we’re probably nagging at this point, but insurance really is crucial and if you’re holding off speaking to an advisor due to concerns on the pushiness, consider meeting one of our friendly, non-salesy community agents!
03 NOT TEACHING YOUR CHILDREN ABOUT MONEY
It is a mistake to shirk the responsibility of educating financial literacy to your children to educators or assume that everything taught in schools will be sufficient. Although countries around the world are placing a greater emphasis on financial literacy in schools, the habits of a child develop from home. As a parent, you should still teach them simple money matters – start with the importance of saving, and maybe when they are older, discuss issues like debt, budgeting, financial planning, etc. Kids who never learnt about the importance of money may have troubles with tasks such as balancing a check book and saving, and I’m pretty sure you do not want your children to learn it the hard way! Check out this article for some key money values that you can teach your children on.
Pro Tip: Start today, start now! Your children are not only listening but they are also watching. Set a good example for them to emulate.
PARENTING IS AN ONGOING LIFE PROCESS
There is no hard and fast rule as to which works and which doesn’t. While you care about your children, don’t forget to give some space and time for yourself to grow as well. Nothing is more important than taking care of yourself, only then, can you have the capability to extend this love and care to your children as well! Ask yourself what you can do now to improve your family’s life in the next 5 years – then do it. Your future self, and your children, will thank you. All the best, parents out there!
PSST: If you’d like a graphic book to work with, our personal finance booklets could be fun for you to leave around for your kids! The best part? They’re FREE. Sign up for one now.
This article is provided by our partner, Not So Crazy Rich Asians. They have a platform for individuals to safely navigate personal finances with community agents. They are not affiliated with any insurance or property company. As a middleman, they build a growing & thriving community of individuals in Singapore.