Saving for your child’s future – get started now!

Sep 09, 2019 | 1 week ago | Read Time: 3 minutes | By iKnowledge Team
Saving for your child’s future

From the moment you first hold your child in your arms, you’ve signed up for the responsibility of another person who is entirely dependent on you. This dependency extends to the time that your child is pursuing their education, and possibly even beyond! With the spiralling costs of education today, it is no wonder that you need to start saving so that they can have the education they rightly deserve. Here’s why it is important to save for your child’s future now.

Understanding the rising cost of education

For instance, the cost of education at a premier institute is roughly Rs. 19.5 lakhs this year in 2018, up by 400 percent from the fees in 2007. Given this estimate, with a 20 percent fee hike every year, the same programme will cost about Rs. 95 lakhs in 2025. This is the case for even an undergraduate study, with the total cost of education estimated to cross Rs. 30.0 lakhs by the year 2030.

Creating a corpus

As a thumb rule, it is never too early to start saving, because the earlier you begin, the longer you have to create a significant corpus that will see your child through their years of education. Another reason is, with lesser financial commitments when your child is younger, it is easier to set aside more money than you may be able to at a later stage. Further, when you start investing early, your outflow is significantly smaller than if you were to begin later, to achieve the same financial goal. Keeping this in mind, let’s see what you can do to save money and invest for your child’s education:

Get a savings bank account

This is a good start to begin the journey of saving for your child’s education. It brings in the discipline of maintaining money in a separate account that you would not touch, thus ensuring that the money keeps earning interest.

Open a fixed deposit 

Whether by way of a lump-sum investment or a recurring deposit, this is a great way to inculcate the habit of putting aside some money at regular intervals (typically monthly, in case of a recurring deposit) for your child.

Mutual fund investments

Depending upon your risk appetite, you can choose from a wide variety of mutual fund offerings that are available today. Whether an equity-based, debt or balanced fund, you can choose the mix that meets your requirements perfectly.

Set up auto-debit options

When you avail of the auto-debit facility, you don’t have to worry about possibly forgetting to pay an instalment and having your investment disrupted. This is an excellent way to maintain financial discipline.

Put away surplus cash

Every time your child receives a gift, for example at their birthday, a festival or any other special occasion, it’s prudent to deposit the money in their bank account. You could consider doing the same with a bonus or an increment that you receive at work, as well.

Spend money prudently

At a family level, see where you can cut corners. While that does not mean doing away with the essentials, it simply translates into trimming spends that you could possibly defer or do without entirely.

Tracking your investments

A child saving plan would be a good addition to your investment portfolio, since it safeguards the future of your loved ones. Whatever be your mode of investment, though, remember that it is important to regularly review and track your portfolio to check whether it is performing optimally. Knowing how it’s faring also helps switch from one mode to another, if need be.

When you’re making your plans to save up towards your child’s education, remember that most of these plans are dependent on your setting aside some money on a regular basis. What happens in your absence, though? To ensure that your child is financially secure even when you’re gone, make sure you have a child education plan in place. Choose to secure your child against contingencies and safeguard their future, today. To know about Aegon Life’s life insurance products like term insurance and other products, visit our home page.


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