When a person has decided to build a family, their responsibility will be higher because one is not leading a life alone anymore. One has to think about their other half and if they have children, every step will need good financial planning, so that there will be no mistake especially issue about money.
 

It is undeniable to say that a person will have more responsibility as they have their own family, especially, when they have children later in life. Apart from the increasing expenses, financial planning is also getting more complicated. One will have to consider saving, investment, property management, other miscellaneous expenses, future plan for children in education, insurance as well as retirement plan which has to be detailed and careful because one cannot expect children to look after them when they are retired. Experiencing delayed parenthood, by the time that the children are graduated, parents would have already retired. Thus, the retirement plan is crucial that parents, who experience delay parenthood, should not overlook.
 

Financial planning for delayed parenthood could go as followed:

1. Do not use retirement fund for children’s educational fees

This topic is very important because parents, who have children later in life, have great financial planning all along, but ended up spending their retirement fund on their children’s school fees with the thought that retirement is still in the far future. They neglected to save for their retirement and it causes them to be unable to retire. The reason is that parents think that their retirement is not going to happen anytime soon, but their children need education and it is a more urgent business that should be immediately settled. When they decided to send their kids to school, of course, as parents, they want the best for their children and dedicate everything to their children. In reality, children still have many options to choose like scholarships and student loans. However, there is no retirement loan for adults to turn to. Besides, adults will need to have a sum of money to use at least 20 -25 years after retirement. When this is compared to the 4 years of university for the children, which do you think is harder to accomplish?

Moreover, in delayed parenthood, parents would already be retired by the time their children are graduated. For example, if parents have children when they are 35 – 40 years old, their children will be graduated with a bachelor’s degree when they are 22. At that time, parents would be about 57 – 62 years old and they cannot expect their children to be taking care of them after retirement. Therefore, the retirement plan is very important.

2. Clearly separate portfolio for investment or for retirement and children’s education savings

If one wants to accomplish both goals, they have to clearly separate investment portfolio for those 2 goals. The clarity of both goals and methods will increase the chance of success because there is no financial tool that can meet all the demands. Thus, when the goals are different and the duration of investment differs, different tools will have to be used. 

For the first choice, parents can invest in insurance products for savings and children’s education such as endowment or unit-linked insurance. This is because there are both savings and safety coverage as the importance of educational planning does not only include school fees until graduation, but coverage in case parents passed away before life expectancy. 

Another choice is to invest through mutual funds and buy life insurance to maintain income and school fees. As for the investment portfolio for retirement. Parents can invest through their respective company’s provident fund, Retirement Mutual Fund (RMF), Single Stock Futures (SSF) and annuity insurance, etc.

3. Use automatic saving or investment plan

Automatic saving or investment plan will establish discipline and help to stop one from investing emotionally. Also, it is a plan that one can ‘save before spend’. For example, investing in the provident fund or, if the company does not have the provident fund, one can invest in Single Stock Futures (SSF) or Retirement Mutual Fund (RMF). This type of investment is an investment plan that forces investors to be self-disciplined and with the conditions of the above investment, investors cannot withdraw money before the designated date or it is harder for them to withdraw the money. This allows investors to accomplish goals in an easier way.

4. Protect income and scholarship with insurance

It does not matter what kind of goal one plans to accomplish in life, insurance is always a tool that will aid them to their finishing line, especially, those who have children later in life. Some couples have children when they are 35 – 40 years old. 10 years after their children were born, their children would only be 10 years old. They have not even entered secondary school and if one of the parents were to be diagnosed with chronic diseases, the whole family will probably crumble. The parents are sick and they need money for medical treatment while their children do not have money for school fees. Therefore, one should get insurance when one is still healthy. It is not just for the sake of individual wellness, but one’s dear family as well. This is because, on the day that one is no longer living in this world, their family and children will be able to go on without any hardship.

5. Increase income and decrease unnecessary expenses

It is undeniable that when children were born into a family, expenses will increase ten folds. For parents to think that they could earn the same amount and be frugal is a little bit too much. To gain more source of income from both working and investment is, thus, necessary. Moreover, parents might have to postpone their retirement if their children have not graduated when it is time for them to retire.

In conclusion, parents will have to establish a balance between their own lives and their children’s life. Do not place too much importance on either that it causes another to be affected. For example, scholarships for children will have to be an appropriate amount. If it has become an amount that exceeds what parents can pay or makes parents unable to save for their own future, it would do no benefit for anyone in the family.

Nipapun Poonsathianrasap  CFP®, ACC

Independent Financial Advisor, Writer, and Lecturer.