You have made it. You are fathers now. As you begin the journey of fatherhood, some of you brimming with confidence and others with some nervousness, I can say with certainty that you are embarking on life’s most magical journey.
Bringing up one’s child well is a challenge few believe they are prepared for. Children don’t come with user manuals. You will often wonder if you should let your child fall a few times and learn from it, or rush to protect. Should you trust your instincts, or google? As a father, should you seek to be a teacher, guide and mentor, or a buddy, confidante and soulmate?
Fear not, as your child grows, so will you as a father, imbibing the best from your role models. The best part is that this is one of those journeys that you begin with a partner. Both of you want only the best for your child. You will support and encourage each other, and together you will raise amazing children.
As someone who has been there before, with two children who are entering their 20s, as well as someone who has guided many young parents as their financial planner, I thought I would share some advice. Like parenthood, money management is also a skill that is seldom taught and rarely taught well. Here are five things you can consider.
1. If you don’t know where you are going, any road will take you there. (I can see my children roll their eyes if they are reading it; they have heard these words many times before.) Start discussing with your wife what your non-negotiable goals are. Perhaps you have been to one of the world’s great temples of learning and you wish the same for your child. You will be amazed how quickly the children will grow and are suddenly heading off to university. Perhaps being gifted is part of their inheritance, so they will need specialized coaching for sports, arts or music. Many parents spend much more on these classes than on school fees. Perhaps you would like to take your child to new destinations each summer. Travel expands the mind and is the most fun way to learn more about the world we live in. Whatever these goals may be, write them down, figure out how much they will cost and start putting money away for them.
2. The choices you make in your life will make your life, so choose wisely. As you assemble the financial instruments that will make your dreams a reality, make sure you strike the right balance between safety and growth. Some parents feel the goals are so precious that one cannot take any risk with them. So they desire to invest in the safest of instruments. But sometimes, being safe today ends up being risky tomorrow. If your investment returns cannot reliably outperform the relevant inflation, then your dreams may be put at risk. Time is a healer, not only of bad memories, but also of market volatility. If your dreams are many years away, equity investments will provide the turbocharge your portfolio needs.
3. Life’s like a box of chocolates, you never know what you’re gonna get. For the first time in your life, for many of you, there is someone who sleeps so well at night (and often for most of the day), knowing that you are there to take care of them. For the first time, you realize what being dependent truly means. But life, like cricket, is a game of glorious uncertainties. All those dreams and goals depend on your future income stream. So using insurance, build a fortress around your income stream and secure those dreams and goals from life’s vicissitudes.
4. A journey of a thousand miles begins with a single step. Sometimes dreams and goals that are so far into the future can relieve you of any sense of urgency to begin acting. But the one thing we hear consistently from our clients who are approaching retirement is that they wish they had begun planning, saving and investing earlier in life. By now many of us would have heard about the magical power of compound interest—he who understands it, earns it; he who doesn’t, pays it. Beginning the process of investing early helps you harness this power to achieve those goals easily.
5. The more disciplined you become, the easier life gets. New parents often resolve to put their finances in order—time to tidy things up and get organized. Excellent start. But it is key that you build the right financial habits and stick with them through thick and thin. Sometimes, being financially disciplined is a lot like getting physically fit. Having a trainer helps. So, if discipline and keeping resolutions is not your thing, then hire a financial coach, who will guide and motivate you to maintain this discipline as you go through your life.
Milestones are words often used lightly and loosely. But you have just passed a major milestone in your life, dear daddy. To a wonderful journey, together with your child!
Shyam Sunder is managing director, PeakAlpha Investment Services Pvt. Ltd