Need For Planning Your Child’s Future

[Child's Future Planning Series]

Session 1: Need For Planning Your Child's Future

We are glad to have you with us for our 1st Session on Child's Future Planning – and that is…

Need For Planning Your Child's Future

Thomas Paine, an English-American philosopher, one of the founding fathers of the United States, political theorist, political activist, and revolutionary, once said, “If there must be trouble, let it be in my day so that my child may have peace."

This is what every parent wishes for. 

Every parent wants to give their children the best future – be it education, lifestyle, and even getting them married in pomp and style.

But in order to fulfil these desires, prudent financial planning is a priority, besides many other things!

In this session we’ll emphasise on the need for planning your child’s future…

Why Plan For Your Child’s future?

Some facts to ponder…

  • Today's Kids, have much more exposure than baby boomers had years ago.
  • There's much more competition, peer pressure…. and that's a reason for the materialistic gratification, wherein many a times they vie for fancy gadgets, branded clothing, bikes, cars, amongst a host of other things. 
  • Parents too are busy in their business & profession, spending long hours at work, with more double income nuclear families mushrooming. As a result, they devote much less time to their kids.
  • So, raising children today is quite different and challenging than it was decades ago.
  • Besides, cost of living today is higher, and meeting expectations is a big challenge.
  • Education has become very expensive. Fees in the quality schools you aspire to send your child have gone up. They also look at the economic / professional status of parents before admission of the child.
  • Children too are independent and decisive. They make up their minds on the career they'll like to pursue. As parents you need to be ready to fund their higher education whether in India or overseas.
  • Likewise, marrying them in pomp and style has also become a status symbol.
  • There are a host of financial products available to plan for your child's future, but selecting them can often be perplexing. That's the reason they are mis-sold at times.
  • Investing in traditional assured returns products may not help you achieve the goals envisioned for your child as interest rates are falling and these costs are rising very fast.
Many of you, as parents, would be keeping aside money for your child's future. But you got to sincerely ask yourself: is that really enough? 

Saving and investing enough for child's future

  • You need to invest in wealth creating investment avenues such as equity mutual funds to beat the rising costs (inflation) of these goals. Starting early via SIPs can help you enjoy the power of compounding besides being easy on your wallet, and infusing a sense of discipline to achieve financial goals.
  • You need a financial plan. Most of the times it happens that, as a parent you know what you want for your child; but aren't clear as to how to get there. A prudent financial plan draws a roadmap to achieve these goals; and if executed well, can help to make your dreams come true.
  • Always account for inflation, while aiming to build a corpus for your child's future. This will enable you to create an adequate corpus, because inflation otherwise plays an effect of eroding the purchasing power of your hard earned money.
  • Customise investment solutions. Merely going by names that prefix child's future goals / benefits may not always be a prudent choice. It may not help you accomplish the goals envisioned. You need to invest based on your investment horizon, risk profile, asset allocation and inflation rate, among other factors to plan your investments. As you compare products before buying home appliances like TV, refrigerator, etc., you must exhaustively compare before investing in financial instruments to address your child's future.
  • If you aren't well-versed in selecting investment avenues, don't hesitate to take help from a trusted financial advisor who can handhold you to plan a bright future for your children.

So, start saving and investing prudently from today itself!

The earlier you make a start, the better it is.

Besides, as earning parents, ensure that you're optimally insured (both for life,  health and property), to avoid a financial setback in case an untoward event were to happen to you. While insuring for life, buy pure term insurance plan and do not co-mingle investment with insurance as some products offer a combination of both.

Moreover, make a conscious effort to make your child money-wise. This will help them understand the value of hard earned money, and manage their personal finances prudently when they turn adults. 

Before we wrap our today's learning session, here are a few vital…

Points to Remember…

  • Cost of education is rising fast.
  • Evaluate your child's future needs wisely, and start chasing goals like education, marriage, among others, with a financial plan in place
  • Begin the process of saving and investing early. This will enable you to create an adequate corpus to fulfil your child's future needs / ambitions.
  • Make sure you aren't digging into funds earmarked for other important goals such as retirement.
  • Don't get carried away by names of financial instruments which prefix child's future goals / benefits. It can be misleading. Evaluate their traits and suitability before making an investment decision 
  • If you're unsure on selecting investment avenues to meet your child's future needs, don't hesitate to hire services of a trusted financial advisor who can handhold you.
  • Insure self and family optimally to protect your children / spouse from any future financial shocks. It is advised to keep insurance and investment separate.
  • (Last but not the least) Attempt to make your child money wise; it can help him/her understand the value of money, and manage his/her personal finances wisely during adulthood.

So to end our learning exercise today, we now invite you to test your learning by taking up this simple quiz (and win exciting prizes!)

Just Click On The Link Below.

Thank You For Participating!

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