It is no surprise that having a kid today can be an expensive affair. Sure, one has to plan for their kid’s academic fees, wedding expenses, and so on. However, what also needs to be considered are the short-term expenses such as healthcare costs, hiring household help, and schooling. All this can add up to quite the amount, which is why it is important for a parent to have a steady plan ready to face these financial hurdles.
Financial experts are always urging people to start thinking about securing funds for their kids’ futures in advance. To ensure that their kids have the required finances to pursue their aspirations, there are a few things that parents need to keep in mind.
- Start saving early
There are a lot of parents who wait until their child begins studying, after which they start saving funds for their further education. This could prove to be too late. It is always considered best to start saving in advance. Those who start investing in advance can enjoy the benefit of compounding, which can work to their advantage in the long run.
- Invest in assets that can give higher returns
It is important for an individual to choose their investments wisely. Focusing on growth assets is an ideal move for long-term goals. Marriage, retirement, or even further studies can all be considered long-term goals. Making a mutual fund investment can be really helpful as this has the potential to deliver higher returns in the long run as compared to the returns of a fixed deposit.
- Be sure of your financial goals
An investor needs to be sure about both their short-term as well as long-term goals. A parent looking to secure their child’s financial future needs to understand the short-term goals such as the child’s healthcare expenses, schooling fees, cost of study material, and so on, as well as long-term goals such as marriage, retirement, further education, and so on. For short-term goals that need to be achieved within 2 to 3 years, parents can consider opting for short-term debt funds. For long-term goals, they can invest in equity mutual funds that can offer higher returns in the future.
- Get yourself insured
While this is a difficult topic, it is very important for a parent to think about the kid in case of their absence. A parent needs to make sure that their kid does not face any financial difficulties in the event of their unfortunate death. This is why a parent should always be covered under life insurance so as to ensure that their kid is financially secured.
The key to safeguarding a kid’s future is to focus on financial planning early on so that there is a corpus of funds created by the time the kid comes of age. It is also a parent’s duty to inculcate good financial habits in their kid for them to be well-equipped in managing the funds to realise all their goals.
