Bringing a new life into the world comes with a lot more responsibilities as well as financial liabilities. When it comes to securing their child’s financial future, parents need to plan everything out in advance.
Only the best child plan would cover several aspects. It would also take into account the various phases of a child’s life, including their education, healthcare, and even marriage.
Use the Power of Compounding To Your Advantage A lot of funds go into availing of higher education from a decent educational institution. Keeping this in mind, parents should try to build a strong corpus for their child’s education fund planning.
Instead of relying on traditional investment tools like FDs, you should explore investment avenues that help you compound your earnings to a great extent. Your ultimate aim should be to build a child education fund that is sufficient to meet your child’s financial requirements even when you are not around.
Plan a better education for your child, by choosing a systematic investment route like SIP and avail benefits like compounding to build an education corpus faster.
Have A Comprehensive Insurance Policy In Place Just having a strong investment plan is not enough to secure a child’s financial future. You also need to take into account other unforeseen situations and dangers pertaining to their life as well.
It is crucial to get a child’s life insured; apart from having the best child plan in place. Also, pick a child insurance plan that offers extensive coverage and comes with an array of benefits.
Take Inflation Into Account While Planning As per research conducted by the National Sample Survey Office, the cost of any professional degree/course doubles in 6 years. In tandem, inflation is yet to be curbed in the Indian financial sphere.
To protect a child’s education fund from being eroded, parents must factor in the rate of inflation. It will help them to plan the future of their child better. It will also keep them mentally and financially prepared for the impending percussions of inflation on their corpus. By incorporating the best child plan that cushions the blows of inflation, you prevent your savings from eroding.
Also read, Financial Tips Every Parent Should Follow to Plan Their Child's Education
Include Partial Withdrawal Plans In The Portfolio It is a wise decision to always be prepared for emergencies. Individuals should make contingency plans and put together a child education fund that helps them tide over financial crunches easily.
But such funds or plans would prove to be most helpful if, at times of emergencies, they come with a provision of partial withdrawal. The ease to withdraw funds would act as a boon at a time when fulfilling a need for a child’s financial future is more urgent than others.
Appoint A Nominee Appointing a responsible person as a nominee would prove useful in the event of the death of parents or guardians. Hence, it is very important to choose a nominee who can be relied upon, because they would be responsible for getting the claim amount until their child turns into an adult.
Besides following these rules, parents should adopt a financial plan that will help them and their children face a crisis with ease. Embracing a comprehensive child education plan will not only help to reduce doubts but will also help eliminate fears that arise due to financial insecurity.