Being a parent in the 21st century is challenging. There are plenty of financial goals that seem impossible because the world is much more expensive. Raising a child requires disciplined budgeting, education planning, and financial independence.
It’s not to say the previous generation had it easy – inflation, recession, capitalism – they faced it all. Yet some new challenges can make meeting financial goals for Millennials and Gen Z parents trickier.
The rise in education inflation and consequent pricing is making education harder to afford for millions of new-age parents.
The pandemic setback, global crisis, raised prices, and unemployment has made raising children in the technologically-proficient world much more competitive.
Here are some financial goals that every millennial and Gen Z parent should adopt to secure their child’s future in this changing economy:
Tips for achieving financial goals!
1. Create an education fund
Borrowing money from relatives, taking out a loan on your house, or worse, stopping your child from pursuing the dream they want are some inevitable financial decisions you may have to take – if you don’t start an education fund for your child.
Investing Rs. 1000 every month for the next 18 years (assuming returns of 12%) can give you nearly Rs. 6,00,000 – Rs. 7,00,000!
Disciplined education planning can help you pay for your child’s tuition, living expenses, shifting expenses, books, laptops, etc.
You can do this easily from home – calculate the future cost of college through the College Cost Calculator – fill out your child’s details to get an accurate estimate of what tuition fees and living expenses can cost you.
Once you know the exact amount, you can start saving up with different options designed to help you achieve your goal faster on the EduFund App.
2. Get a health insurance
Another financial goal parents should aim toward is getting health insurance coverage for their children. Good health insurance can help you cover your child’s medical bills and expenses without burning a hole in your pocket.
The idea that only the sick need health insurance is a huge financial mistake you can avoid. From minor injuries to seasonal diseases and hospital bills, insurance can help you cover the bills partially or entirely, depending upon the coverage you opt for!
3. Try the cookie jar approach
Many parents forego their retirement savings for their college. You can avoid this by using the cookie jar approach to investing.
Define specific long-term goals you want to save towards, like a child’s college, retirement fund, travel fund, or house fund, and allocate funds to every category based on when you wish to complete this goal.
By defining your goals and allocating appropriate funds to achieve the goals in the set time frame – the chances of hitting your goals increase!
4. Start an emergency fund
The tragedy is a part of life; unfortunately, we can only prepare for it to soften its blow. Creating an emergency fund does precisely that.
It is a cushion to fall back on when an emergency like job loss, health crisis, or sudden financial expense. An emergency fund should have enough money to help you sustain yourself and your family for a couple of months.
For instance, if your monthly expense is Rs. 20,000, you must have Rs. 1,20,000 in your savings account to fall back on.
This emergency fund is a financial goal for all millennials and Gen Z parents to embrace. This fund can help you prioritize your goals, savings, and investments.
5. Budgeting is king
Another financial goal that most parents overlook is budgeting. We all want to give our newborns everything possible – the best bed, the latest gadgets, toys, brilliant daycare, schooling, etc.
Doing so makes it easy to go overboard and spend more than you want. Budgeting can help you eliminate this oversight – by allocating a specific budget to different needs; you ensure that you can meet all of them and avoid stretching your wallet.
These financial goals for millennials and Gen-Z parents can be a short survival guide. With the cost of education rising yearly, basic education needs and schooling are likely to be affected.
The only solution is to start saving early and systematically to provide a secure and safe learning experience for your child from school to college!
FAQs
How can I ensure I can afford my child’s education, given the rising costs?
It’s crucial to start an education fund to secure your child’s education. By investing Rs. 1000 per month for the next 18 years with an assumed return of 12%, you could accumulate nearly Rs. 6,00,000- Rs 7,00,000. \
This disciplined planning can help cover tuition, living expenses, shifting costs, books, laptops, and more. Use tools like the College Cost Calculator on the EduFund App to accurately estimate and achieve your education savings goal.
What’s the importance of having an emergency fund?
An emergency fund is crucial to cushion financial setbacks such as job loss, health crises, or unexpected expenses. Aim to have enough money to cover your family’s expenses for a few months.
For instance, if your monthly expenses are Rs. 20,000, having Rs. 1,20,000 in your savings account, provides a safety net. This fund ensures you’re prepared for unforeseen situations while prioritizing your goals, savings, and investments.
How can I balance saving for my child’s college and my retirement?
You can avoid sacrificing your retirement savings by using the “cookie jar” approach to investing. Set clear, long-term goals for different needs like college, retirement, travel, and more.
Allocate funds to each category depending on your timeline. This strategic approach helps you allocate resources efficiently and increases the likelihood of achieving your financial goals.
Why should I consider health insurance for my child?
Health insurance for your child is essential to cover medical bills and expenses. Even minor injuries and seasonal diseases can lead to unexpected costs.
Health insurance ensures you’re financially prepared to handle these situations without straining your budget. Remember, insurance coverage varies, so choose a plan that aligns with your needs and budget.
