Financial planning is very important in today’s world. You must start planning your finances for the better future of your child. When you start early, you can maximize the benefits of the investments by way of compounding.
Finance is required at each step of life and when you want your child to have best of everything, it becomes vital that you start planning now. A child will have both short- and long-term expenses. So, you will be needing money for at least next 20-25 years for your child’s expenses.
Starting from doctor’s visits, to the expenses on birth of child, to the vaccinations, to the day-to-day requirements of your child, school & college education, coaching fees, activities’ charges, higher education, marriage and so on, for all this, you need money. Hence, money is of utmost importance.
Below is the list of things you must do, in order to secure your child’s future:
- Begin with an insurance policy.
In order to secure your child’ future, the first step is to get your life insured with a good amount, which must be at least 15-20 times of your yearly income. Your child is totally dependent on you for all his financial needs, and it is your responsibility to take care of your child, even when you are not around him. So this will act as a financial security if something unforeseen happens.
In addition to a life insurance, a parent must have a medical / health insurance in place. You can have individual medical policies as well as there family floaters health insurance policies which includes child’s health policy also.
You can choose from the numerous options available in the market, basis your capacity and your requirements.
- Investments basis on your short-term and long-term finance requirements
From the multiple investment options available in the market, you need to choose the best for you. This choice is made on the basis of your short-term and long-term requirements of money. Considering your risk taking capacity and time frame, you can invest in equity, public provident fund, mutual funds etc. as a part of long term financial plans (which may be child’s higher education, marriage etc.). You can also estimate the amount you will need, say 15 years from now, and accordingly you can do backward calculation to know the amount you need to save in the present so as to mature that amount in future.
And for the short term requirements like school fees, annual school expenses, coaching class fees or other activities, you can invest in FDR’s etc.
So get into the habit of saving first and then spending the remaining amount from your regular incomes.
All these factors must be considered and taken care of when somebody is already into parenting or planning to have a child. These are extremely important for the nurturing of the child in the best manner. Always make sure that you have sufficient funds for yourself and your family.
