By Priti Rathi Gupta
A woman, who dons the avatar of a mother, can feel quite overwhelmed as she balances multiple responsibilities, particularly as a single parent. She works hard to fulfill those responsibilities every day, for the happiness of her child. Being a single mother, the key concern that would run through one's mind would be money management, legal proceedings and also personal matters. However, the decision to secure her child's future and finances, inevitably takes top priority, for which women should start planning beforehand.
The investment decisions a mother can make today will determine whether or not her child will be able to lead the life one can wish for them. A single parent would like to provide their children with the best education, experiences and opportunities available in today's world. To avail these prospects, one should first identify the source for flow of funds that will make their child's ambitions a reality.
Open a savings account for your child
There are many ways for single mothers to safeguard their child's financial future. As the saying goes, well begun is half done. One can make a quick and easy start by setting up a bank account in their child's name. There are several banks that provide the option to open an account for children even at a very early age. Once the account is open, one can start depositing a feasible sum of money, which will more or less serve like a large piggy bank for their child.
In addition to these savings, one can also consider investment products like equity mutual funds, a debt product like Public Provident Fund (PPF) or debt mutual fund, etc.
Invest in a SIP
Even a small amount of investment can enable mothers to accumulate a large corpus of money for their child's better future. To attain long-term goals, it is important that one should consider investing in mutual funds, with the help of a Systematic Investment Plan (SIP), which is similar to a recurring deposit. Nowadays, this is a smart option as the rate of interest received on an investment depends on the performance of equity markets, which can ultimately help to secure better returns over time.
Get health cover
It is crucial for single mothers, to be adequately insured with a proper term insurance such as life insurance. One should also have an adequate health cover, with a health insurance plan to cover medical expenses. While the children are still young, it is important for a single parent inculcate the habit of saving, so that children can also understand the true value of money before they even begin to spend. Children should be given requisite knowledge about financial planning, so that they can take active interest in acquiring savings from the very beginning.
Plan for emergencies
Irrespective of responsibilities and financial benefits for their children, a parent must not forget to provision and maintain adequate emergency funds. These funds will ultimately serve as protection when a parent or a child may actually need money in case of unforeseen situations and emergencies.
With these investment options, a single parent will not only be able to create a dedicated pool of money to meet their child's requirements, but also accumulate a reasonable sum to fall back on during an emergency. Throughout the cycle of motherhood, one should remember to take calculated decisions to be ready and financially secure at all times.
(The writer is Founder, LXME and Managing Director, Anand Rathi Shares & Stock Brokers Ltd.)