Having a child is the biggest blessing in a parent’s life. Coming of a new member in the family, bring a lot of joy and happiness in the family, but at the same time, it does come with big responsibilities.
Growing up a baby, with all the good facilities like good health, good education, good life, and more has expenses beyond your salary, and more than that these responsibilities are sections where financial readiness before the time, is much important.
It is a must be financially prepared, before the call of your responsibility towards your child's needs, so that you can give the best of everything to your child, without any hurdle in your way. Well, you can accumulate big for your child’s needs, for this, you need to add some necessary elements in your financial planning, that I am discussing below, read to know about it:
1. Add Investment Plans for Your Child's Education
The school (Kindergarten to 12th standard)
Nowadays, providing good education to your child is much expensive, but also much important, thus you cannot ignore this section. The education cost in schools (say from kindergarten to class 12), generally ranges from 12k to 12 lakhs, per year, which range of cost you are going to choose depends on your philosophy towards education.
Also, when you plan investment for your child's education, don’t forget to include commute charges and additional tuition or coaching classes fee along with schooling fees.
After class 12, many students opt to pursue B. Tech, some opt to Medical Courses, some opt to pursue management courses, some students also have plans to go abroad for their higher education.
Well, if your child has a plan to get under-grad in India, then you can assume if your child pursue engineering course, then it is going to cost you from 2 to 3 lakhs per year, and if your child pursue, medical course then it is going to cost you 7 to 15 lakhs per year, also don’t forget to include other expenses like hostel or PG’s, fooding, and more, if your child is going to stay in a different city.
If your child is planning to get under-grad by a foreign university, then you can easily assume an expense of 20 lakhs to 50 lakhs per annum.
People who don’t plan before for their child’s education, often take loans to cater to these expenses and end up paying a good amount of interest on the loan amounts for a long time. Also, if you think that your child is just five now, there is much time to plan for its higher education, then let me tell you “time does fly”.
2. After Education, Wedding Expenses Are Also Important to Be Planned
We Indians generally believe in big-fat weddings, with a lot of rituals and a big expense for each ritual, there are many less, who believe in low-cost court-marriage, or go that way. Well, it is hard to predict how your child will like to get married, or how you will be thinking about your child’s marriage after 26-27 years, from now. When it’s hard to predict, why not plan for it, if you decide for a big-fat wedding, you will be ready to carry the expenses, through your investment returns, and if you decide for low-cost court marriage, then also good you can use your investment return, for another important work. You must be aware that even our fore-father thought of wedding expenses in advance.
3. Securing Your Child’s Future After You
At the time you plan your finances, never miss adding life insurance to it. Your life insurance is a kind of security for your loving child, after you. Life insurance gives coverage to your child to carry out their expenses after your sudden demise.
The situation may come, when your child may get hospitalized, due to some severe illness or anything else, this situation would have a sudden demand for cash in your hand. Well, you won’t be much worried financially, if you already have a health insurance plan for your child.
4. The world is a book and those who do not travel, read only a page
Going on trips and vacation with family is almost everyone’s need. Before you were only a couple, but now that you are having a baby, your travel cost increases. There are concessions for children, but if you assume then your travel cost will increase by 1.5 to 2 times just for the flights/train costs, and if your kid has reached his teenage, then you must go for another room when you travel, simply means extra expense.
5. A hobby a day keeps the doldrums away
Every child has a hobby or says talent other than education, maybe singing and dancing, maybe painting, maybe photography or more. It is a parents duty, to nurture the talent of their kid in a perfect way, well this can be done when you provide extra tuition to your kid for their hobby, and simply extra class means an additional expense of minimum Rs 1000 per month.
Basically, you need financial preparation to nurture the good hobbies, say talent of your kid.
6. You Need an Extra Hand to Take Care Of your Child
If both, you and your spouse, are working people, then you need an extra hand, say a nanny, to take care of your child at home, at least, till the age your child becomes turn 8 years in age. The cost of a nanny could range anywhere from Rs 3,000 to 5,000 per month for daycare.
Well, you must now be aware of the big and important expenses that you need to tackle, to give a good life to your child.
It’s always better to start planning for your child’s higher education, from their early age say when they are five years, assume the college expense, add inflation rate to it, now calculate your monthly SIP amount, and without any delay start investing in Equity Mutual Funds via SIP, and accumulate big for your child’s education.
For other expenses like wedding, you can add another Equity mutual fund to your investment portfolio, and for short-term expenses like vacations, you can invest in debt mutual funds. Calculate your expense, calculate your SIP amount per month, to reach the goal, and once you are done with calculations, start investing in mutual funds.
Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).