Tiger mums talk money: Three single parents on savings, investments, and more
Bringing up children is a roller coaster ride with its share of ups, downs, and upside downs. And keeping a firm grip on the bar gets harder when you are a single parent. Besides the daily juggling of the kids’ routines and one’s own life roadmap, there’s one essential aspect that most single mums or dads cannot ignore: money management.
When Anita Rajagopalan came to Mumbai from Singapore with her one-year-old son a decade ago, she had all of ₹50,000 in the name of savings. “I had no money, no job and pretty much had to start from scratch. As a single mother, it is absolutely essential for me to provide for my son’s education as well as save up for my own retirement,” says the 47-year-old.
“Expecting money when my divorce proceedings ended would have delayed the process by another 20 years, so I decided not to take a single penny and move on,” she adds. Rajagopalan’s hectic job as Group Creative Director with a leading advertising firm in Mumbai, and a little boy to look after, left her with little time to manage her savings. One of her best decisions has been getting a financial planner to manage her money. “Now, over 60 percent of my income goes into varied investments. I don’t need to worry about my son’s schooling and am very comfortable on my savings,” she adds.
Rajagopalan’s assets are chiefly divided among fixed deposits, mutual funds, and insurance policies . The last, of course, is a no-brainer for anyone with dependants, and more so for single parents who are most likely the only source of income in the household. In addition, Anita’s family avoids wasteful expenses and stays away from mortgages. The Mumbai-based executive doesn’t own a car or a fancy phone. “I stay away from heavy assets which would require me to take a loan,” she adds.
Having your financials in place is more than half the battle won, especially when you are the sole bread earner. “It’s very important to be financially independent. Being a single parent has brought its share of struggles but financials are something I have never had to worry about. I have been working for many years and my salary is more than enough to cover all our expenses. This has been a very big blessing for me,” says 38-year-old Jaspreet Kaur, who works as a Director with an IT firm in New Delhi.
She invests in fixed deposits, mutual funds, and a good insurance plan to secure herself and her seven-year-old son. “I fortunately had a good education and have worked throughout. Our set-up works just like any regular family, the difference is that I am taking the financial decisions alone. So, I allocate time every other month to planning where I want to park my money,” she says.
Forty two-year old Shefali Sharma chose an aggressive career in sales to make sure the cash flows were enough to provide for her daughter, who is now 19. “When I returned to my parents with a three-year-old child, I didn’t even have enough to pay for her preschool.” Shefali was determined to not take financial support, and so borrowed the money from her father, strictly as a loan. “Now, I have enough savings to send my daughter to study at any university of her choice,” she adds.
Being frugal with your expenditure, cutting down on fancy vacations, and investing a significant part of your monthly income are some ways in which these mums have built a corpus. “My father is from the armed forces, and for years, I packed off my daughter to wherever he or my brother was posted so that I could finish all my work assignments.” With comfortable savings now, she has already visited 12 countries in the last decade, adds Sharma, now Director and Head of Region with a leading personal care brand.
Experts recommend getting a good life insurance cover and also a health plan to provide for any medical exigencies for you and your children. These are important for everyone, but more so for single parents as they are the only ones providing for their children. The other important thing to remember is planning for a retirement corpus. “In trying to make up for being the only parent for my daughter, sometimes I would go overboard getting her things while with myself, I was very frugal. I had to check myself there. Now that my daughter is well provided for, I am planning for my own retirement.”
Her two cents: “We are not super humans. I am not good with financial management so I got expert help.”
For us single parents who want ourselves and our dependents to be financially secure, it’s a great idea to find financial instruments that can offer us the dual benefit of insurance and investments. And tax benefits are the cherry on the cake! For example, unit linked insurance plans (ULIPs) encourage goal-based savings, offer tax benefits, and offer flexibility. The best part is you can choose where to invest (equity, debt, etc.) based on your risk appetite. Several insurers like HDFC Life , in fact, enable you to easily invest in a ULIP. Because a ULIP helps inculcate financial discipline in you as a parent, you can easily save for your child’s higher education or your own comfortable retirement. Isn’t that great?
Here’s how YOU can smash stereotypes and manage your money like these tiger mums:
Balance your cheque book. Schedule bill payments with paydays to ensure there are no deficits
•Save for a rainy day. Every month, allocate a fixed sum towards savings. Else cut down other variable expenses for that month
•Get expert help if numbers are not your expertise. A financial planner can help you pick the right investment products best suited for your risk appetite and time horizon
•Insurance is an absolute must to ensure a worry-free future. Here, a unit linked insurance plan can offer the best of both worlds.
•Buy what you really need. Don’t clutter your house with things you can do without
•Compare prices online. Browse around for the best deals before making any big spends
•Invest in a good life insurance and proper health cover since your children are dependent on you
•A child plan can help you save for higher education
•Save for your retirement. The children can get a study loan, you won’t get one for old age