As parents, we all love our kids dearly! Yet, many of us come up woefully short when it comes to taking some basic measures towards securing their financial future. Here are a few pointers in the right direction.

Get adequately insured

Remember, your life cover requirement goes up manifold after the birth of a child, as the financial risk that’s associated with the loss of your life skyrockets. Take out time to re-evaluate your life cover requirement based not only on the increased monthly expenditures post childbirth, but also the cost of meeting his or her future goals (such as education or marriage). Work out the new coverage requirement amount and buy a simple term plan to bridge the gap. Don’t succumb to the mistake of buying traditional “Child Plans”, or worse – committing the senseless act of insuring your child’s life!

Start a SIP for their higher education

Per a recently concluded ‘Education Insights’ survey, conducted by Aviva and IMRB, investment in education is the topmost priority for Indian parents. The survey reveals that 81 percent of parents consider saving for their child’s education to be a top priority with respect to their savings plans. Around 47 percent parents remain concerned about the cost of higher education – which tends to escalate at a higher than average rate in our country. How can you ensure that your long term monthly savings outpace inflation? Simple! Ditch the insurance policies and fixed deposits and start an SIP in an equity mutual fund. Make sure you do the math (assuming, say a 12 percent annualized return and an 8 percent inflation rate) on just how much you need to start the monthly SIP for. Starting early can dramatically reduce the net “out of pocket” outlay required, and also ensure that your child strides into his or her career free from the shackles of a burdensome student loan.

Establish a ‘schooling fund’

Look beyond higher education planning. School fees are skyrocketing with each passing year, and can become a severe stressor if not planned for in advance. It’s critical to set up a ‘schooling fund’ for your kids by saving aggressively. You may set up a fund which you plan to start drawing upon 5-7 years from today. Not only will this ensure an adequate quantum of fund availability for your child’s school fees, but it’ll also free up space for aggressive retirement savings once the fund has been set up.

Prepare a Will

Having a valid will in place can save your child from potentially messy inheritance proceedings. A will ensures that your assets will flow smoothly to your child, and not to any other family member whom you may not have wanted to inherit your assets. You must also name a legal guardian in your will.

Shape their money values

Take time out to talk to your kids about money, the importance of saving and spending wisely. As a parent, you’ll play a key role in how your kids perceive money. Make sure they don’t start thinking that it grows on trees! Kids with credit cards can be a dangerous combination. While you’re at it, teach them the value of honest, hard work too.

Start planning for your own Retirement!

Your own Retirement, you say? How could that possibly be related to your child’s future? Well – it is. Think about it - your child will likely be in the tumultuous, pay check to pay check, early to mid-career phase when you retire, possibly with young children. The last thing you’d want to do is to burden them with the stress of having another mouth to feed. Sar utha ke jiyo!

"This article was contributed by Guest author, Aniruddha Bose, Editorial Consultant with BW Businessworld and was posted on”

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