Punjab News Express
The birth of a child is the most joyous occasion in the life of a couple. Parents, naturally enthralled about the addition to their family, start devising plans that would involve their bundle of joy as well. From planning for the family’s long-term comfort to managing daily care of the child, parents have to take care of many things.
While planning for your child’s future, it is necessary to include money as well to ensure only best things are available to your child. Let’s discuss how to plan a secure and comfortable financial future from the moment your bundle of joy comes in your life:
- 1. Review your life cover
As a parent, your responsibilities increase when you become a parent. Your child is financially dependent on you, and you will have to pay for child’s education, healthcare, and lifestyle. You may have weaved lots of dreams for your child’s future, but they all will suffer in case of your sudden demise. As the family’s breadwinner, you have dependents whose financial life you need to secure.
Take a term insurance cover so that it can give financial protection to your family in your absence. Your life insurance cover should be adequate to cover the expenditure of your child till he/she becomes financially independent. If you already hold an insuranceplan, the birth of a child is the right occasion to revisit the cover and ensure it is sufficient.
- 2. Include your baby in your existing health insurance coverage
Your family has expanded, and so the coverage of your health insurance should also be. It must be amended to cover your baby as well. Doesn’t matter, if it is a family health insurance or corporate health insurance, you should take the necessary steps to cover your child immediately.
Various health insurance companies in India cover new-born from the day one without extra premium if they have provided maternity coverage as well. Then some health insurance plans cover the first-year vaccination expenses of a child as well if you cover your child under health insurance policy.
- 3. Start child education planning
Last year, IIM Ahmedabad increased the fees of its two-year post-graduation programmes to Rs 21 lakh. Education costs are skyrocketing. As a parent, it is your responsibility to start your child education planning the moment your little one comes in your life. It is imperative to start building the fund early in your life and reap the benefits of compounding and reduced risk in the long run.
Here are some instruments to help you with your child education planning:
- 4. Open a saving bank account
Start a saving account in the name of your child. Not only you can start contributing through your income, but you can also direct cash gift received in the name of your child.
- Invest in long-term fixed deposits: For child education plan, you can invest in long-term investment options like fixed deposits, the public provident fund (PPF), etc. With afixed rate of returns, you can use this instrument to build a huge corpus for your child’s future. Make sure to consider inflation while investing in this option.
- Invest in child insurance plans: You can invest in child insurance plans that let you invest your money in equity and debt. Moreover, these plans come with an added feature that secures your child’s future even in your absence. In case of your sudden demise, the plan will continue to cover your child’s dreams.
- Go with Mutual Funds: Choose diversified equity mutual fund schemes and start investing. You can start SIP in 2-4 equity-oriented funds and grow your wealth in the long run. Start investing any additional amount received by children on birthdays or gifts from grandparents in mutual funds. Your investment in equity mutual fund schemes will not only grow your wealth but will also help you save tax.
Conclusion
The future of your child will depend on the steps taken by you today. While, the key to successful planning for your child’s future starts early, at the same time, it is never too late to start.