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Here Is Why You Should Not Be Worried About Affording A Secured Future For Your Child
Planning ahead will help you to direct, cultivate and protect your wealth to secure your children’s financial future
Photo Credit : Shutterstock
The entire world today is going through the volatility of changing economies and increasing day-to-day costs affecting every sphere of family well-being and security. Financial uncertainties arises unannounced leading to individuals and parents being concerned of their economic situations basis which depends upon the existence of a future safeguarded. This signifies the importance of an early goal planning that will ensure a secured future for the child and dissuade the concern of parents being uncertain as to where and how to begin. Planning ahead will help you to direct, cultivate and protect your wealth to secure your children’s financial future.
Identify/Foresee Your Child’s Interests and Inflation
Always try to explore the interest areas which a child may want to choose and follow as his career. Although identifying the same at an early age can be challenging, given a bit of attention and focus on their interest areas, gauging the same might become a possibility. Armed with some background research on costs involved, you will have the right idea of the amount you need to save in order to help your children reach their goals. As a parent one needs to calculate the cost of the particular course and the years from now when their kid will be ready for the same. The most important factor which people usually miss is the inflation number. One must inflate the course fee with the number of years to achieve the target corpus. Suppose the course fee for any international or domestic university/college is around Rs.20 lakhs and the current inflation rate is around 6% then the cost of the course after 20 years will be approximately Rs. 1.81 crore. Now if one saves around Rs. 18,000 per month in the equity with the return rate of 15% then the target corpus can be reached in 20 years.
Plan Your Savings and Investments Systematically
The recommendation is that this fund eventually adds up to the benefit of any unforeseen event. The cash reserve in the form of systematic investment can keep you safe in the face of financial difficulties. A separate savings account or savings bond may be an intelligent move toinvest some funds onSystematic Investment Plans (SIP) and mutual funds, which may prove into a beneficial financial habit. If you are not a risk taker then one can opt for debt mutual funds or bank deposits, but one has to save more because the returns don’t fetch back in double digits.
Have a Life Insurance Policy or Beneficiary Term Plan in Place
Having an adequate life insurance policy will always act as a protectionfor your children. Purchase a stable life insurance policy and make your children the beneficiaries. One can always go for term plan which acts as a shield to cover families of the policyholder in case of untimely death and terminal illness. According to recent developments by the IRDA(Insurance Regulatory Authority of India), the minimum death benefit for 45 years or less is 10 times of the annual salary and for those over 45 years is 7 times, even the guaranteed surrender value has been eased down from 3 years to 2 years. The recent amendments also relax the window of reviving the policy from 2 years from 5 years which benefits the consumer by reinstating the policy.
Saving for their Future Education
Saving money for your child’s education is an absolute must when the cost of education is as high as the cost of having a roof over your head. As with any large savings goal, it’s best to start investing early. One can also request help to construct an investment portfolio by the experts, as there are plenty of reputable companies that offer an education saving plans to help plan your child’s higher education.The Financial planners most of the time recommend shorter tenure investments than planning the actual time of the goal. This helps the investor bypass the risks of the market. This is to make sure that the target corpus is safely transferred from risk involved equity to a safer platform like debt mutual funds or bank deposits.
Become the teacher
Inculcate your children about the importance of saving in life at a very early age because all these good financial habits that will be taught in childhood will last a lifetime. Follow a basic childhood exercise by teaching your children to save each penny in a piggy bank and help them by planning how they will use their pocket money for the month. Keep them encourageto save for things they really want and help them meet their goal. This knowledge will later help to take better control of their own personal finance and plan for their own future.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.