Home loan EMIs, children’s school fee, phone upgrade, car repairs, saving for retirement.. the list is endless. Couples with kids face a different kind of financial music—balancing the wants with the needs. Some of the financial goals are negotiable, even as some others can’t be compromised with. You can postpone the vacation, but you can’t postpone the year your child will go to college. And, if you are from the sandwich generation that has the responsibility of managing your parents, as well as your children, life could be challenging financially.

43-year-old, Delhi-based Chavi Hemanth, lives with her son Urusharman Vittal Hemanth, 12, and husband, Hemanth. Her daughter Vallarika, 20, is studying in the UK. Chavi is the founder of EBS Inc, which is a consulting company in the field of retail and non-store retail. With a career spanning 15 years, she has managed to face professional challenges along with managing the family. She has also engaged a financial advisor who assists her in dealing with her investments. “I have been investing in mutual funds for more than a decade and continue investing for my financial goals,” she says.

Setting priorities

Chavi is clear about retiring her debt. “I want to repay the home loan and be debt free as soon as possible,” she quips. She is equally concerned about having enough money to fund her son’s education and her own retirement. While multiple goals call for a well-thought-out financial plan and strong adherence to it, identifying goals and prioritising them helps everyone.

You will face lifestyle expenses, vacations, children’s school, extra-curricular activities, higher education expenses, medical costs, servicing house and car loans and retirement planning. All of these demand simultaneous attention; to achieve these goals, you must create different investment portfolio for each. “Create seperate investment buckets for term insurance, future planning and immediate consumption,” advises Khalid Ahmad, head products, PNB MetLife.

Chavi has taken necessary measures to a large extent. She has invested in mutual funds and PPF towards building a retirement corpus. She is also banking on the family’s investment in property to fund children’s higher education.

Avoid these mistakes

Do not make financial decisions arbitrarily. “We have seen married couples investing in mutual funds with long term vision but after continuing the SIP for 7-8 years, they withdraw the amount for less important goals like travelling abroad or buying an SUV,” points Sanjiv Bajaj, MD, Bajaj Capital.

Many also go overboard by binging on loans on credit cards and even personal loans to realise their financial dreams. There is nothing wrong in borrowing money as long as you are clear of the costs associated in case of delayed repayments. In the many short term financial aspirations, do not lose sight of longer term goals. It is common for parents to postpone their retirement savings or even dip into it to fund their child’s education.

Likewise, never make the mistake of under-insuring your health and life. The responsibilities and dependents are too many to leave it to chance. Take adequate insurance and review the scope of cover at different stages in life and enhance the cover as the need arises. And, never stop contributing towards your own retirement, however small the sum. By aligning tax savings with your financial goals, you will hit two birds with one stone. Don’t get bogged with too many financial demands on you, as with a plan in hand you will sail through this phase in life as well.

Essential PF checklist for singles

• Plan finances before the baby arrives
• Do not mix yours and child’s financial goals
• Spend within your means on the child
• Talk to children about money as they grow older
• Start investing for your child’s future
• Don’t skip your retirement plans

preeti.kulkarni@outlookindia.com