FILDADDY’s Business & Money

Fildaddy’s list - 6 things all dads should consider in their financial plan (part 1)

In your role as a father, it is essential that you are able to  firstly have a source of income, and secondly know what to do with it.

Here are my top must have’s for all dad’s and family financial plans:

1. Life insurance

Quite a lot of people shun the idea of life insurance thinking they are still young and healthy. Life is full of surprises, and sometimes what we expect the least comes most unexpectedly.  As main breadwinner (if you are?) your family’s financial capacity becomes directly proportional to the income that you bring. If anything happens to you, meet an accident, break your legs, get paralyzed or anything that renders you unfit to work, the cash flow just stops coming in.

I placed this on the top of my list as I think this is one of the most important allocations you have to have in your budget .

I have seen so many families completely devastated when faced with the loss of a loved one, who also happens to be a breadwinner. Mother’s/ wives not knowing where to get money to have their husbands buried. Children uncertain if they will be able to continue their education. The loss becomes magnified. If you have life insurance, your family is given a chance to recover from their loss and time to get themselves onto their feet.

Some people say life insurance is not needed because they do not need money should they lose their lives. But precisely! Life insurance is not for the insured, but for the one’s you leave behind.

There are various plans available in the market that you can choose.  For those with a little extra and can afford it, you can opt for the combination term insurance and investment, where after a certain period of paying premiums, the funds interest becomes enough to pay for its own premium.  On the otherhand, you can also get pure term insurance, where you are  only insured for the period you have paid for.

The point is, get whatever plan fits your current capacity.

2. Educational fund

When I ask my friends how much they pay for high school and college tuition, I get dizzy at the thought of how much I will be paying by the time my son goes to high school, further more to college.

In the past, what was more abundant were college plans. You would give money for a certain period,  afterwhich your beneficiary, normally a son or a daughter, could attend any school they want without paying for anything. But recently these have changed.

You can get educational plans now that are more of an investment vehicle more than anything.  You give money, they invest it, and after a period of time, 15 years or so, you can get back your money with interest.
Regardless of the scheme, the amount of investment, and the returns,(if you want to save money in a can, do it, but I don’t advise it) what is important is that you allocate for the purpose of preparing for your child’s education, now! With these types of plans you don’t even have to have a child to start investing.

If your child later on decides he doesn’t need college, or you are still earning enough to pay for it, then put it in your retirement fund.

continue reading part 2