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Ways to ensure financial stability/guarantee for a young family

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Ways to ensure financial stability/guarantee for a young family
November 27, 2020

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There are a lot of unforeseen emergencies that can crop up in life. Many uncertainties lie along life's path, and for young families, it's important to ensure that there's an effective financial plan in place. When you're just starting a family, you'll most likely have a lot of dreams, hopes and goals. These goals could range from retiring comfortably to saving up for your children's education or marriage. To attain these goals, financial stability is of utmost importance.

But how do you attain financial stability? Well, to get there, you need to formulate a financial plan that includes many essential products like life insurance, long-term investments, and emergency funds. Here are some practical ideas that can help young couples like you get started on the journey of financial stability.

Budget your finances

Budgeting is one of the most fundamental places to begin at, if you're aiming for long-term financial stability. Start by listing out your income and expenses - both fixed expenses and your optional expenses. The balance will give you a fair idea of how much you can afford to invest each month. This is the golden number that forms the basis of your financial plan.

Based on your budget, you can plan your investments and choose the instruments that will help you fulfill your long-term goals without much trouble. Developing a portfolio of investments smartly can also help you earn guaranteed returns on your investment, so you do not have to suffer from financial instabilities.

Steer clear of debt

Budgeting can get you off to a good start. But once that's done, you also need to keep your debt levels in check. Borrowing money may be required at some junctures in life, but if you're not careful, your debt can rise to unmanageable levels. High-interest debts can eat into your savings. And this may eventually reduce the amount of money you have left to invest.

To steer clear of debt, particularly, the high-interest kind, it's important that you formulate your financial plan carefully. When you keep your debt levels within manageable limits, you can ensure that your family is financially stable. This is pivotal for young families that are still learning the ropes of financial planning.

Save up for your children's future

For a young family, saving up for the children's future will undoubtedly be one of the top priorities. If that features on your goals too, then you can include investments that help you secure your children's future in your financial plan. This is one of the most important steps to ensure financial stability, because when you secure your children's future, you won't need to worry about huge expenses later in life.

Ideally, long-term investments that offer guaranteed returns can be excellent choices to add to your financial plan. These investments help your money grow consistently, so by the time your children attain college-going age, you have a sizable corpus to rely on.

Build a retirement corpus to fall back on

In addition to ensuring financial guarantee for your children, you also need to look at securing your future and the future of your spouse too, isn't it? After all, it's not possible to continue working for the rest of your life. At some point, you will want to retire and relax. And so will your spouse.

Here's where a retirement corpus can prove to be useful. There are many investment options that focus solely on retirement planning. By including these products in your financial plan, you can either benefit from a lump sum amount or you can enjoy periodic income, depending on what you choose.

Include insurance in your financial portfolio

Life insurance and health insurance can help you secure your future and improve the financial stability of your family. Life insurance allows your family to fall back on a safety net in case something untoward happens to the main earning members, while health insurance offers protection from the rising costs of healthcare.

HDFC Life offers many such beneficial life insurance plans. HDFC Life Sanchay Plus, for instance, is a scheme that offers you assured returns along with the option of receiving your maturity benefits either as a lump sum payout or as regular payments periodically. You can choose between the lifelong income option, which guarantees*you income till the age of 99, and the long-term income option, which spans over a period of 25 to 30 years.

*Provided all due premiums have been paid and the policy is in force.

Conclusion

These are some of the many steps you can take to begin your journey towards financial stability. Starting early can make a huge difference for a young family. So, make sure you formulate a holistic financial plan early on, and keep revisiting it to make changes as needed, so your financial plan is in line with your long-term goals.

ARN: ED/09/20/20586

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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