Father’s Day is globally celebrated in June; it is a day dedicated to the celebration of fathers. A father has a huge role to play in the family; a lifelong responsibility that comes with significant financial implications, as there are so many demands on their resources. Here are some tried and tested tips for all our fathers out there:
Establish an Emergency Fund
Having an emergency fund is one of the most important steps in a financial plan. If you don’t already have one, do start to build one. Ideally, at any moment of time, you should have six to twelve months of living expenses saved in your emergency fund. If it’s a challenge to set that aside all at once, start small and build up gradually. Automating your savings with a direct debit each month is a convenient way of achieving this.
Consider your Risk Tolerance
Too many men have lost huge sums through some “too good to be true” business deals introduced by friends. Men tend to bet big on riskier investments, hoping for that phenomenal lucky break; sometimes it doesn’t materialise, the deal goes sour and can turn the family finances upside down. Particularly where there are dependents, be a little more cautious about diving into those speculative opportunities that promise huge returns. Often what sounds too good to be true, is too good to be true.
Talk about Money with your Partner
Money woes are a leading cause of fractured relationships and divorce. Keeping financial problems to yourself makes things worse and can damage the fabric and stability of your relationship. Ideally, marriage ought to be a trusting relationship and discussing financial worries with your spouse and sharing the burden should ease it. Because men and women tend to have different money personalities, there are benefits in discussing financial plans and working together towards achieving joint goals.
If you have loads of money and you hide it away from your spouse, leaving them completely in the dark, this breeds mistrust and will put a strain on your relationship when they find out.
Protect your Family against the Unknown
Far too many people ignore the need for insurance until a major mishap or setback occurs; it is then that the impact of inadequate insurance coverage becomes glaring. No matter how meticulous you are with your finances, failure to purchase adequate insurance can impair your financial future and put you and your loved ones in a desperate situation in an instant. Motor vehicle, household, health and life insurance, are just a few of the various policies that are available to protect you and your family. Life insurance is particularly important if you are the primary or sole breadwinner.
Insurance plans serve not only the financial obligations in the case of a disaster but often have an interesting investment component that paves the way to support important milestones for your child including higher education, investment in a business venture or other goals.
Save for your Children’s Education
Funding your children’s education is likely to be one of the largest expenses you will ever face and it must thus be carefully planned for. With the rising costs of education, if sound investments are not made early, covering the huge expenses for the secondary and post-secondary years can be a huge challenge. When your children are still young, you have the benefit of time to select investments that offer the prospect of higher returns over the long term. There are educational insurance plans that encourage you to plan for several years ahead when you need the money. With careful planning, discipline, consistency, sacrifice and professional advice, you can make adequate provision for your children’s education and give them the best chances in life.
Do you have an Estate Plan?
Naturally we don’t like to dwell on death, but you do have loved ones and you do want to ensure that they are taken care of should anything happen to you. The only way to achieve this is through an estate plan; it will ensure that your investments and property and other assets do not go into the wrong hands. Review and update your will, trust and other estate planning documents periodically, to ensure that they are in accordance with your current status and intentions; you might have had more children or wished to include or remove some beneficiaries, may have acquired additional assets or disposed of some.
Review your Beneficiary Designations
At some time or the other, you have probably had to fill out a form or some other documentation where you had to clearly state your next-of-kin. When last was it updated? Many people don’t take this designation that seriously and sometimes even forget whom they designated as time goes by. It is important to check beneficiary designations periodically, say once a year, to make sure that they are up-to-date on all documents including your insurance policies, your next-of-kin form and your estate planning documents.
Who is your Next-of-Kin?
In Western cultures, the choice of the spouse as next-of-kin is the most obvious one, for example, the mother of his children is generally the person in whom a man places the most trust. In Nigeria, however, it is very common for a man to choose his brother as next-of-kin. In the event of the husband’s death, making the wife your next-of-kin will save her and the children a lot of hardship given the traditional extended family system where other family members can often forcefully claim their brother’s property. There are numerous examples of widows having to cope with not only the loss of their spouse but also of all their personal possessions and property.
Many people assume that if they pass on, their spouse will automatically become beneficiary to their estate. If you were to die intestate, that is, without leaving a will, your property will not simply pass to your spouse as you might think; strict rules rank your next of kin, and your property will be distributed according to laws of intestacy. In Nigeria, an estate may be subject to native law and custom, which varies from state to state; this may not be what you would have desired for your family.
Teach your Children about Money
As financial literacy is not taught in schools, fathers have the responsibility to teach their kids the value of money and how to manage it. This is a life skill that will serve them throughout their lives. A financially responsible child that is taught to value money and who understands that money is earned through hardwork and learns to manage it prudently, will also make it possible for the family to achieve its long-term goals.
Invest Time in the Family
In the final analysis, all the money in the world cannot replace that precious time for bonding, building and nurturing deep and loving relationships with your family. This is the greatest investment of all.
Opunimi Akinkugbe is a Personal Finance Expert and CEO of Bestman Games. For more information, visit www.moneymatterswithnimi.com