Family & Social Child Developement

3 Common Mistakes Parents Make in Financial Planning

Siew Ling is a Senior Financial Consultant and mother to 2 adorable children. Here are three common mistakes that she finds new parents often make in planning their finances.

Starting too late

Some plans are time sensitive. For example, health insurance starts to cover a newborn starting from the second week onwards. However, that's when the mother is having her confinement period, is sleep deprived and engaged with many other tasks. By the time parents are more settled (2-3 months later) and ready to apply for insurance, any pre-existing medical conditions would hinder the smoothness of an insurance application. In the worst-case scenario, it will result in no coverage offered.

What you should do: Start early. It pays to plan and start early when it comes to financial planning.

Lack of joint financial planning

A lack of joint planning by dual income couples prevents them from having a complete picture on their cash flow. Sometimes, couples are not fully aware of the plans and entitlements that they have which leads to confusion and delayed questions to the partner on why such plans were purchased in the first place!

What you should do: Be aware and involved in financial planning. Regardless of your background or industry, whether you work or are a SAHM, it is always good to keep up to date with regard to financial planning matters. Read online, talk to friends or colleagues, and do make the effort to understand what the family is paying for - don't leave it to just one partner to handle. In the event of a critical situation or any untoward incident, you don't want to be spending time making sense of policy documents!

Choosing available over expert guidance

While close and well-intentioned, friends and acquaintances may not be the best persons qualified to handle your family's financial planning matters.

What you should do: Avoid taking short-cuts in choosing the right planner. Take time to research and to find out the planner's strengths and specialisation. Do spend time to review financial matters as a couple and with your planner (at least once a year), or else it will take a backseat in the humdrum of everyday routine.