Planning your child’s future is definitely one of the most significant actions you will take in your lifetime. It is a notion deeply rooted in the Indian culture, where a child is often referred to as the “riches of the home.” However, as any parent will attest, the modern child’s upbringing entails a lot more than just showering them with affection; it calls for a thorough and well-conceived financial strategy as well.
Facing up to the relentless increase in school fees, university tuition, and the costs of extracurricular classes, you might feel a bit anxious. It’s quite natural, actually! After all, every parent desires to give their children the best in life. The proverbial key to keeping your nerves at bay is to get cracking early and select the right Child Plan.
Imagine a child education planner as a kind of Bridge. On one side, you have your child at present, with a possible scenario of them enjoying their toys or just starting their schooling. On the other side, you see their desire to be a doctor, or an engineer, or a pilot or an artist. The bridge ensures the safe passage of your child, even if there are unforeseen life changes.
Why not get started then?
Money time is your greatest ally. In case you begin to set aside some funds when your child is small, you have approximately 15 years before they eventually go off to college. Normally, several small contributions made month after month turn out to be a considerable monetary value over time. This occurs due to “compounding”, a term used when your principal amount generates returns, and thereafter, these returns also generate returns!
If, instead, you delay your child’s college fund preparation until he or she is 15, then you’ll have extremely high up-time before attaining your aim, i.e., a large number of funds saved per month. Keeping to your resolve to begin today, grants your money the lifespan to amplify enormously and sturdily, akin to your child.
What is a Child Plan?
Rather Child Plan is a combination of savings and insurance options to provide for your child’s future. It is not the typical bank savings or life insurance policy type.
Its highlight is the “Waiver of Premium” feature, which, surprisingly, is a very compassionate one. Simply put, if the parent is unfortunate enough to pass away, the insurance company would cover all future premiums. The insurance would be paid just as planned, and the child would still receive the education funds when he or she is 18 or 21 years of age. It means the child’s dreams never have to get interrupted in any way.
How to Select the Right Plan for you
Each family has different needs, so not every plan that works for others may work for you. If you become the child education planner, you must consider some very important points:
1. Determine the Requirement
First question you should consider is “When will my child really need the money?” Normally, children have two main periods when they will require money. The first is after completing 12th class when they go for a college degree program. The second may be for their further studies or even their wedding. Select a plan that aligns funds availability with these milestones.
2. Stay Ahead of Increasing Prices (Inflation)
In India, the price of education is increased every year. What is the price of ₹5 lakhs today might be equivalent to ₹10 lakhs in ten years. Therefore, a good plan should give returns higher than the rate at which the prices rise. That is the reason why many parents consider selecting plans where a portion of funds is invested in stock market (Equity) whereas the rest is invested in safe places (Debt).
3. Flexibility
We cannot always predict what life will throw at us. There can be times when after setting aside a good sum for savings the next time you may find it hard to squeeze out even a small amount. The ideal plan for you is one that not only adjusts the instalment amount as per changes in your financial situation but also gives you the option of withdrawing a small part of your corpus for an emergency if the need arises.
Steps to Success
- Be Realistic: The right approach would be to allocate a sum, which even if put aside continuously for a long period without/with minimum pay rise etc. is still not going to cause strain on your finances. A plan to save a small amount regularly will always be more effective than that of a large amount occasionally.
- Keep it Separate: It will confuse you very much if funds for retirement and those intended for children education are combined. Both are very necessary but have different time horizons.
- Review Every Year: In case your child changes his mind about the profession of an engineer and wants to be a musician, then obviously that would mean quite a bit more going abroad for study and your plan should be updated to reflect this change.
Conclusion for Indian Parents
Indians consider education as the most valuable asset of all. A good degree is a passport to a better life. Purchasing a Child Plan today will not just be a buying an instrument of paper or a bank balance but also buying” peace of mind”.” The opportunities and advantages you have today are far better than those available to you probably in your own parents’ time, so capitalize on them.
You are ensuring that when your child comes to you in years with a gleam in their eyes and a dream in their heart, you will be able to say “Yes.” You won’t have to think about where the money will come from or if you have to take a big loan.
The best gift you can give is education. It is a gift that no one can ever take away from them. So, make a small move today. Talk to a financial adviser, check your choices and start making that bridge. Your future self, and your child, will be grateful for it.
Don’t forget that you do not have to be good at math to make a great plan for your child’s education. You only need to be a parent who loves enough to start. A journey of a thousand miles starts with a single step, and that step is choosing the right plan for your child.