Contemplating Single Parenthood? Here Are Do's And Don'ts
Money being locked in inaccessible instruments is the last thing one would want to end up with, says financial planner Kiran Telang.
In case of either divorce or demise of a partner, single parenting is never an easy path.
It's surely one that calls for systematic planning and stable income generation. In the case of divorce, the court will try to analyse who the welfare of the child rests with. And when planning this out, the parent needs to ensure that the finances are not just available for the short term but are enough to sustain long-term needs.
"What one needs to think about is if there is enough income or assets to finance future goals and expenses. Alimony could also act as this income if invested correctly," said Kiran Telang, author and certified financial planner. "But specially in case of monthly alimony, depending on it completely will cause issues in case of a stoppage from the other spouse's side."
She also highlights the need to be prepared for a loss of income also in case the parent is working. She also pointed out that life insurance for the surviving partner in case of demise is also something that cannot be overlooked.
"Assess all the sources of income and assets first in case of a demise. There are also other options like provident funds from employers. It's better to list and claim these systematically as sources can easily be missed," she said.
After this, one needs to weigh if this will support the goals and if not, find ways to increase the income as well. One can also revisit goals and see if they can be modified, Telang added.
"There might also be assets that are idle that can be monetised," she said, citing plots of land or other assets that may not be generating much income. When asked about 'don'ts' of single parenting, Telang said that money being locked in inaccessible instruments is the last thing one would want to end up with.
"Look at liquidity factors always. Most times people choose options that are not-liquid, which are easy and traditional," she said. "But do not lock large chunks of money where you are unable to withdraw from as and when you need it."
