Millennial parents who are born between 1981 to 1996 have a major challenge to keep up with their finances and to take care of themselves and their kids. From upbringing of your child to managing your finances, it can be a very tormenting job for millennial moms to juggle different roles. That being said, millennial moms have to make smarter financial decisions. Millennial moms have grown up in the world of technological evolution and are well equipped with the art of technology. Technology has now become a chosen field even in the universe of investing.
Laying out a financial plan with the set goals is an important step to achieve financial independence. With growing needs of children and increase in spending, it is very necessary to differentiate between needs and wants and curtail expenses as needed. Bringing in financial discipline in life is a challenge in itself.
Simple Tips For Millennial Moms To Manage Her Money Smarter:
Keep a Check On Your Spending
You need to set a budget for your child’s education fees, coaching classes, classes for extra curriculars. This is an important step to know how much you are spending as you don’t want to end up burning a hole in your pocket. Budgeting also helps to know how much you will be spending versus your monthly earnings.
Cut Through The Clutter With Financial Advisory
It is an important step as a financial advisor will help you decide which investment avenue to go or which stock or mutual fund to invest in. This advice doesn’t work the same for all the people. It might differ from person to person as it depends on factors such as age, risk appetite and income.
Start an SIP
A systematic Investment Plan is a powerful mode of investing. It gives the benefit of compounding and allows to buy more mutual fund units when prices are low and buy less when prices are high. An investor can start investing with as low as Rs 500. This brings in the advantage of setting aside some portion of your income for investment on regular basis, bringing in financial discipline.
[ Also Read: Mutual Fund Investing with SIP ]
Investing early can do wonders. In investing going slow and steady is a path to success. Starting early can give you the benefit of taking more risks. With growing age comes a more financial burden. Starting young is advantageous as there is no or very less financial burden which allows an investor to take more risks. Furthermore, starting early also gives the benefit of the power of compounding – where investment earns returns and that returns earn more returns. Money invested early builds a huge corpus due to more years of compounding. It also allows you to build a habit of disciplined spending and keeps you aligned to your budget by cutting unnecessary expenses.
Diversification Is Important
Safeguard your child’s future with diversification. Diversification happens at two levels- between asset classes and within asset classes. In addition to allocating your investments among stocks, bonds etc. you’ll also need to spread out your investments within each category. In addition to allocating your investments among stocks, bonds etc. you’ll also need to spread out your investments within each category. This decreases the size of risk in your portfolio.
Prioritizing Purchase of Insurance
The main purpose of purchasing a life insurance policy is to give a replacement income to dependents in case of mistimed death. Always ensure that the life insurance cover you have is minimum 15 times more of your average annual income. Millennial moms should consider investing in term insurance policies versus life insurance products as term insurance covers higher amounts at very low premiums.
Prepare For What if’s
What if’s here means unexpected situations such as car break down or minor home repairs. You never know when unexpected situation arises which might need some cash on hand. It is advisable to build an emergency funds for such uncertain situations. Example- Your child gets a sprain in his ankle while playing cricket and you need to visit a doctor. In such a case, you will have to have some money handy to pay for the doctor’s fees. Liquid fund investments are best suited for such investments. Such investment does not have a lock in period and one can withdraw money within 24 hours on business days. They are the least risky among all the categories of debt funds. Tarrakki Zyaada is a feature on the tarrakki app where money gets invested in a liquid fund and along with that one gets an investment linked investment debit card. This debit card can be used all over India and all VISA enabled ATMs in case of emergencies, online shopping and many more. This helps you keep your money invested and you can use them at the same.
Millennial moms are familiar with digital investing and are well informed which pushes them to make smart financial decisions which makes a financially secured future for themselves and their children. Having a child in your life, brings in a significant change in your spending. This needs to be catered to in a right way with investing.
[ Also Read: MF Vs PMS: Which is a better investment option? ]