3 things you must do before your child turns 1 year old
3 things you must do before your child turns 1 year old – Being a parent is one of the most beautiful experiences in life. It is one of the most enjoyable and yet challenging phases of life as well! A child brings a lot of love and laughter into her parent’s life coupled with loads of responsibilities. Hence, being a parent, I totally understand that the child’s well-being is of utmost concern!
There are many ways to plan your child’s future and planning for the same usually happens only after the child is born. I am sure, as parents, you would be aware of the major expenses that you would have to incur for your child starting from schooling to higher education and maybe studies abroad as well as wedding. There are millions of smaller occasions like 16th birthdays, Europe school trip, etc. which may not be prioritized at the beginning. However, as soon as the child is born, the clock starts ticking and hence the financial plan for the parent also must begin immediately!
While planning for your child’s future, there are 3 things that you need to keep in mind:
- Systematic Plan for your child’s future expenses and building up the corpus for meeting educational needs
- Planning for exigency in case of your early demise so that the planned expenditure is not hampered
- Liquidity in case of any additional expenses that might come in the way
So, after your child is born you have about 15-16 years of time to plan and accumulate before you need the first lumpsum amount of money for her education. There are 3 basic ways that you MUST do for your child before she is 1 years old so as to ensure that you take your first step forward to secure your child’s future.
However, you need to keep investing for the entire tenure of 15 years so as to reap maximum benefits of the Power of Compounding and the Rupee Cost Averaging so that the risk involved in the volatility of the market is evened out.
1. Term Plan
As parents, we often forget to cover our life before planning for the child’s future. It is a self-realization, that being your child’s ATM, you need to first protect your life, so that, God forbid, if anything were to happen to your life, your child’s future and her planned expenses are not hampered. This plan would take of the protection angle and cover your child’s uncertainty in case of your early and unfortunate demise.
2. Mutual Fund SIP
Start a Systematic Investment Plan (SIP) for your child by choosing one of the Mutual Funds according to your risk appetite and your investment objective. Investing in Mutual Funds will help you save in a disciplined manner and yet provide a window for liquidity.
If you are not a risk lover, you could opt for a Debt Fund, where the risk exposure is low and if you are a risk lover, you could opt for Growth or Equity Fund. To stay safe, you could choose a nifty index fund as well with lesser fluctuations. Over time, the returns from SIPs are great so the secret is to continue. Some basic tips in Mutual Fund SIP:
- Opt for Diversified Equity Fund, so that the fund does not depend on the success or failure of any particular sector
- Opt for Growth and not dividend, so as to reap maximum benefits of the Power of Compounding
3. Child Plan
A Child Life Insurance Plan has many benefits like Guaranteed Maturity Benefit so that you can plan your expenses and cash flow accordingly. There is another very important benefit called Premium Waiver Benefit such that if anything happens to the parent, i.e. the proposer, then the insurance company promises to pay the future premiums so that the plan continues and the Maturity Benefit is paid out to meet the child’s future expenses as per planned. This takes care of the fact that the plan continues till the end, i.e. till the child is a major irrespective of the fact that the parent is alive or not.
So, if you follow these 3 simple steps to plan for your child’s future, it would surely be an easy task for you to meet the goals in a very planned and systematic manner and fulfill all your goals. All the best!
3 things you must do before your child turns 1 year old : 3 things you must do before your child turns 1 year old