Parents of newborns are faced with many more responsibilities and financial obligations. To ensure their child's future, parents should start planning in advance.
It’s only a good child plan that takes each life stage into accounts, such as education, healthcare, and marriage.
To ensure that your child has a comfortable future, parents should take into account factors including the cost of higher education and savings.
To improve clarity: As such, there are certain pointers you should keep in mind to give your child a proper future.
Parents should build a strong educational fund for their children by saving money
As a parent, it is important to consider that the cost of education over a decade from now will be more expensive.
It’s not a good idea to rely on traditional investment tools like FDs. Your aim should be to build up an education fund which composes of enough money for your child no matter when you pass away.
By starting a Systematic Investment Plan for your child's future, like an Education Savings Account, you can take advantage of the interest on compound interest to build up their education fund faster.
The table below offers a better understanding of the associated benefit of routing investment through SIP –
|Product||Debt Funds||Balanced Funds||Equity Funds|
|CAGR Yield (%)||8%||12%||15%|
Earning better outcomes in the long-term would be possible with financial planning that starts early, such as investing. Parents should begin practicing financial planning for children soon after they are born so they can prepare themselves to handle challenges regardless of how far off in the future it is.
Let's take a look at an example of this same concept in practice.
|SIP Tenure||18 Years||15 Years||12 Years||8 Years|
A strong investment plan provides little protection if a child is in danger, as there are many dangers and unforeseen situations..
It is crucial for parents to have life and medical insurance for their children; make sure you choose a child plan with extensive coverage and benefits.
As per a report conducted by the National Sample Survey Office, the costs of any professional degree/course have doubled in 6 years. Moreover, inflation has yet to be brought under control in India’s financial sphere.
Parents must stay aware of inflation because it can reduce your child's education fund. Estimate how much the rate of inflation will affect your savings, and plan accordingly so you are prepared for those effects. Protect And Prioritise Vital Goals
Implementing a financial plan for your children will enable you to not only secure their future but also ensure that each goal is attainable in a specific order.
Parents should ensure they individually plan for their child's future goals. By splitting the plans into individual terms it will significantly increase the probability of achieving each goal.
In case of unfortunate death in the family, a child will need financial support to keep them financially stable and to achieve their academic goals.
Make sure a child plan you want to buy has this add-on included.
For parents planning for your children's future, such investments typically include high-yield and more risky funds that have the potential to outperform other asset classes by generating significantly higher returns over a long time. Such financial plans are known to have much greater risks but also come with the advantage of allowing individuals to recover from losses better than in other less risky strategies
It is a smart decision to plan for emergencies and create an education fund that helps you in financial hardships. But the beauty of these plans would be lost if, in times of an emergency, a parent is not able to withdraw funds for their child’s needs.
In the event of the death of parents or guardians, it is important to appoint a responsible person as the nominee. This ensures that your child can easily receive money through a life insurance claim until they turn into an adult.
To provide your child with better opportunities, it's important to review and adjust your financial plans.
Thanks to this adjustment, parents are better prepared for the future when things change. Parents can modify their investment strategies and savings plans accordingly so that they stay in sync with their goals.
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