There are lots of financial mistakes to avoid as a new parent, but these ones are so important. There is always this excitement of bringing a new baby into the world; the feeling is practically unimaginable. I have been there, and that is just the phase of a new life. Let’s be frank; before the birth of that baby, expectations were written, dreams were clear, and the vision remained clear. But along the line, it becomes as if all the plans are becoming a mirage.
There are several financial mistakes parents make – especially the new ones, which affects a lot in the future. The aim of this article isn’t just to point out the financial mistakes to avoid as a parent. It is also to show you some smart ways of escaping the rat race as a parent.
Just before you continue reading – if you are a parent, I will tell you for free; “if you are not careful, you are going to spend the rest of your life working for your kids.” To some people, this is their dreams; while to others, they need to spend some part of their later years, enjoying the fruit of their labours directly!
What are the financial mistakes to avoid as a Nigerian parent?
No Insurance Policy
I explained a particular insurance policy as one of the best investments in Nigeria anyone can make. The reception wasn’t quite nice because people felt and screamed “Why Insurance?”
I was never an advocate of getting an insurance policy until I felt it first-hand. The ignorance of the uncertainties of life is the beginning of failure in a family. Uncertainties are bound to happen, so you should get prepared. The failure to get a life insurance policy is one of the biggest financial mistakes to avoid as a Nigerian parent.
A Life Insurance Cover helps you with the following;
- A habitual savings culture:
Most people spend 7yrs working and end up saving just an amount that would be enough to get married. After marriage, they end up working for life without any savings again. Their only hope becomes their pension fund (which I don’t believe in). They make money just to pay bills; in any situation, the money stops at some point, it becomes a downhill slide for the family.
- Protection against uncertainty:
Most wives are against their husbands getting an insurance policy. But when life hits them hard, they turn over to begging as a means of survival. Not getting an insurance policy because your pastor said “ye will not die” is foolishness. Death is a normal phase of life; the question is “how prepared are you?”
Once the breadwinner of a family under an insurance protection dies, the family is paid a very handsome compensation that can be used to make life bearable for the family. So not having a family insurance plan is one of the financial mistakes to avoid as a Nigerian parent.
Procrastinating Saving for their Children Fees
No matter how well you think you are investing, you should have an untouchable savings account (with an insurance firm) that would take care of your children fees when the time comes. Most old parents are still working tirelessly to pay tuition fees (which isn’t mean to be so).
Right from when you get married, you should open an educational savings account (with an insurance firm, so that it acts as a protection and also becomes untouchable till it is needed) to help sort the issue of school fees in the future. Investments can fail, so you should know that procrastinating for your wards tuition savings is one of the financial mistakes to avoid.
Overspending during celebrations
Let’s assume that you’ve made the financial mistake of overspending during your wedding, why should you repeat the same thing during other celebrations?
- Child dedication
- Naming ceremony
All the above are costly financial mistakes to avoid. At this stage, you should be prudent in spending. We are living in a volatile country, so you should check well before making a leap when it comes to finances and spending.
Overspending on the Babies
I understand that your kids deserve the best that life got to offer, but it isn’t so important to strike the right balance between giving them a good treatment, and overspending.
You want to paint the walls of your room for your child, buy unnecessary clothing just to make the child look cute; they are nice, but really not necessary. Major spending should be channelled towards investing in the child’s future. Trying to overspend on a baby is a major financial mistake that should be avoided.
Getting Bad Loans
Loans can be good, and also can be bad as well. If the loan is gotten to buy an asset (maybe a real estate to be leased), it is considered a good loan. But in a situation where a loan is gotten just to buy a car or rent an expensive house, it is part of the financial mistakes to avoid. If you neglect this important point, you might end up servicing loans till you get old and die (probably your kids would inherit the same). So be careful when it comes to collecting loans just to live an expensive lifestyle.
Many parents don’t know the financial mistakes to avoid, so this post is aimed at educating. If you have excessive streams of cash flow, you can do as you please; but if you are just an average parent out there, you should consider this post and implement it.
Till we meet again, keep winning and making more money.