Top 7 Things to Remember While Planning for Your Child’s Future

If you are expecting a baby this year or next, you’ve got plenty of celebrity company, mama. There’s a baby boom happening right now in the entertainment industry, from bloggers to reality TV stars and top actresses.

Kareena Kapoor, Anushka Sharma and Bindi Irwin are only a handful of the celebrity moms who have recently announced their pregnancy and are waiting to meet their kiddos.

Bringing a new life into the world requires far more responsibilities and financial commitments. When it comes to ensuring the future of a child, parents will plan it all out in advance.

The right programme for children will cover a variety of areas. It should also recognise the different stages of a child’s life, including their education, healthcare, and marriage.

To ensure a financially stable and happy future, parents should consider factors such as higher education costs, savings size, etc. As such, there are some factors that you can take into account to ensure that your child has a promising future.

1. Take Advantage of the Power of Compounding

A lot of money goes to provide higher education from a good institution. Given this, parents should seek to create a good corpus for the planning of their children’s education. As a parent, you should factor in the reality that the cost education over a decade from now will be more expensive.

Instead of focusing on conventional investment instruments such as FDs, you can pursue investment avenues that will significantly multiply your earnings. Your primary goal should be to create a child education fund that is adequate to meet your child’s financial needs, even in your absence.

Design a better education for your child by selecting a structured investment route such as SIP and making use of benefits such as compounding to create a faster corpus for education.

2. Invest Early

The advantage of a longer period, the ability to withstand more significant risks and the potential to gain higher comes with early investment. If parents start practising financial planning for children soon after birth, they’d be better prepared to protect their future.

If they invest in schemes with a long-term outlook, the value of early financial planning for children will yield better results.

3. Keep an All-Inclusive Insurance Scheme in Place

It is not enough to only provide a sound investment strategy to protect your children’s future. You will need to remember other unexpected circumstances and risks that pertain to their lives as well. Getting a child’s life insured is crucial; apart from providing the right child insurance. Furthermore, select a child care plan that offers comprehensive coverage and comes with a variety of benefits.

4. Don’t Forget About Inflation

According to research carried out by the National Sample Survey Agency, the cost of any specialised course/degree doubles every six years. In parallel, India is trying to combat inflation.

Also Read: Why Do You Need an Emergency Fund?

To prevent a child education fund from being depleted, parents have to consider the inflation rate factor. It’ll help them prepare their kid’s future better. It will also keep them emotionally and financially healthy for the imminent inflationary percussions on their corpus. By implementing the best child programme that cushions inflation blasts, you are preventing the eroding of your savings.

5. Secure and Make Critical Goals a Priority

Child financial planning is the key to ensuring the future of your child. But what adds to its appeal is that it accounts for and ranks all of their priorities in a feasible order.

Parents should ensure that they address each strategy separately; to be best prepared to achieve a specific target for the future of their child.

6. Spend in High Yielding Plans

Individuals can take advantage of the opportunity to invest in high yield plans that carry greater risk through the practice of early financial planning. High return funds can outperform other asset groups and are considered more effective in building a corpus.

Additionally, the long-term duration of these financial strategies helps creditors to tolerate more significant risks and better recovery from losses.

7. Invest in Partial Withdrawal Plans

It’s always a smart idea to be prepared for emergencies. Every parent should draw up contingency plans and set up a child education fund that will help them comfortably gloss over financial crunches.

But these funds or schemes will prove most beneficial if they come with a partial withdrawal clause in times of emergencies. The ease of withdrawal of funds will serve as a blessing at a time when it is more important than most to meet a need for the child’s future.

Make it a point to review your financial plans to ensure you provide a good education for your kids.

Parents who engage in updating and adjusting their child’s education fund are more likely to be ready for the variables that may erode their possible future contribution to the fund for children. This helps them directly modify their finances, savings and plans accordingly, and lets them keep sync.

For any clarifications/feedback on the topic, please contact the writer at sujaini.biswas@cleartax.in