#childsafety | 10 rules to keep in mind to secure your child’s future financially

The miracle of childbirth brings an abundance of joy and fulfilment to the life of a parent. The months leading up to this wondrous occasion become crucial stepping stones to shaping the future of the new life brought to planet Earth.
There is no tell-all book or crash course that can truly prepare one for the highs & lows of parenting. While parents strive to give their best to their children and secure their child’s future, mothers especially play a huge role.

The feeling of worry might be difficult to wash away, but planning and securing your child’s financial future can help you qualify for some of it.

Here are 10 rules to consider that can get you started in time:

1. Set up a bank account in your child’s name
One of the first conversations that new parents have about their child is the name, christening titles to hopes and dreams. While we secure the aspirations we have for our children with names, one of the first steps to incorporating the safety of their financial future is opening a bank account under their name. Setting aside an account will help accumulate money only for your child, and can also be used to accumulate any gifts and presents from relatives and friends.

2. Start planning for short-term goals like their school education fund
As a parent, it is essential to plan for short-term goals like expenses you will incur within the 1-2 years when your child is born such as clothes, medicines, baby food, and school fees as the cost of education is skyrocketing year-on-year. Effective planning and investing for short-term goals can make this journey very smooth for the parents. You can look for investment options like debt mutual funds, FDs, RDs, etc. if the goal is for less than 3 years and equity-based investment options if the time horizon is more than 3 years.

3. Start planning and investing in their higher education
It is never too soon to start planning for your child’s higher education. Starting early gives you ample time to grow your wealth and helps you achieve your financial goals by investing small amounts of money consistently. Higher education is a costly affair and one that should never be bound by monetary compromises. You can consider factors like the current cost of education, inflation rate, child’s age, admission age, expected returns, etc. This will help you arrive at a goal amount and since this is a long-term goal, you can allocate the majority of your money to equity-based investment options to earn inflation-beating returns.
4. Get term insurance for the earning members of the family
If there are any lessons the pandemic has taught us, it is the importance of preparedness for the inevitable. Many households have been uprooted and witnessed difficult times through the death of the sole breadwinners of the family. Having term insurance in place helps secure the future of your loved ones. In case of any unfortunate event, term insurance can provide financial stability for the family.

5. Get adequate health insurance
A robust investment plan encompasses all financial security measures – one of them is having sufficient health insurance. One can never predict the unprecedented events that can unfold in the future. Having your child protected under a good health insurance plan will invariably ease the financial burdens in their life.

6. A parent must maintain adequate emergency funds
Always be prepared for any emergencies! As the saying goes, ‘it is always better to be safe, than sorry.’ Despite having all your bases covered and planning for everything, one can always expect sudden emergencies to arise. Creating an emergency fund provides a fail-safe for any such occurrences. These funds will serve as a safety net in case a parent or child requires money in the event of an unforeseen situation or emergency.

7. Teach Money Lessons to your kids
Inculcate the habit of saving and growing money! One of the best ways to ensure the safety of your child’s financial future is to help encourage them to build a healthy relationship with money. More often than not we carry the values and teachings that we learn as children well into our adult life. Whether that is how we learn to save our allowances in piggy banks or bargain with shop vendors for spare change, some of the most important practices we carry about money are the ones we learn from watching our parents. Make sure you are passing down the right and adequate financial wisdom to your kids.

8. Make money a part of your dinner table conversations
In Indian families, conversations around finances are rare and not encouraged. Women are not encouraged enough to take charge of their own finances and participate in money-related conversations. While dinner table discussions are the time of the day when every member sits together to discuss family matters, sharing topics around money and finance can encourage your children to have an open mind about finances.

9. Diversify your investments
As is customary with any financial plan, never put all your eggs in one basket! Diversify across asset classes to manage the risks and optimize the returns. Move your investments from equity to debt as you get closer to your goal.

10. Follow up on your plan to ensure you’re on track
Expenses big and small will always come and go. Budgeting for every month and updating your plan regularly helps you stay ahead of the game and be better prepared to match your goals!

While the list is endless and a foolproof plan is always in the making, it is these tiny little tests that make the end goal fruitful. Our perseverance today can promise a wonderful and golden future for our children.

The addition of a new family member is always a moving and truly memorable moment, especially for a mother. We all begin with certain aspirations and dreams for our family and only wish to give the best to them! Let’s ensure that we are doing everything the right way and checking every box on the list to provide the best and most secure future for our children.

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