Being able to provide for the demands of the children, howsoever big or small, must be the most satisfying feeling for any parent.
Every parent desires nothing but the best for their child, and always works towards making sure that their child has access to the best facilities and the best lifestyle that they can provide for.
The most important and critical priority for any parent is ensuring financial protection for the child’s future and access to the best possible education as good education is the best insurance for their future.
But inflation is a major issue that our country is grappling with today. Cost of living and that all facilities be it house, petrol, food is rising steeply and education is no exception to this. An MBA degree that used to cost Rs 4,00,000 three years back now costs Rs 12,00,000 and is estimated to cost Rs 25,00,000 in 15 years.
Are you financially prepared to bear this expense?
In a survey has found that while more than 80 per cent parents are concerned about their child’s education, there are only a handful that actually goes the next step and start saving for the same. As a parent, you must resolve to be financially prepared to fulfill the aspirations of your children and protect them financially from unforeseen circumstances.
Students nowadays opt for unconventional career options. While such careers have a huge scope, the initial investment required for the education in such cases can be steep, especially if one is not prepared for it. This could become a major cause of concern for both students aspiring for such courses and their parents looking to fund their education.
A step-by-step planning to finance the child’s education can make the task easier for parents, who should start by calculating and deciding on the amount they would want to accrue by the time the child would need the funding.
While calculating the amount, it is imperative to take into account the rate of inflation e.g. one must keep in mind that a course that costs Rs 600,00 today will easily cost Rs 20,000,00 in 15 years.
After zeroing in on the amount, the next step would be to explore the best investment option. There are various financial instruments available in the market that can help you save for the same – mutual funds, bank fixed deposits, insurance plans.
Mutual funds and bank fixed deposits work on the premise that you are going to be alive through the product term and invest regularly. Therefore, in the unfortunate event of the parent’s demise, if s/he is unable to service the principle amount after say five years, the nominee will only get the total corpus available on that date of the mutual fund or fixed deposit, and not the targeted amount. There is also no provision here to ensure a regular income stream to meet interim expenses till the child turns 18 or 21.
This concern can be addressed by investing in a child education insurance plan. Investing in these plans will ensure that the targeted corpus is available for your child irrespective of you being around or not, as in an event of the parent’s demise the subsequent premiums would be paid off by the insurer.
Therefore, the fund you targeted to have for the higher education of the child will be available as planned. The interim expenses like school fee will also be provisioned through a regular stream of income till the child turns 18.
Investing in a child insurance plan will not only take the financial burden off your shoulders but will also give you the peace of mind ensuring that the education needs of your child will be taken care of, whether you are around or not. In addition, it is also advisable to invest in a low cost term plan to pay off any loans and fund the household expenses for the spouse and child.
This is indeed a necessary step towards securing your child’s future. Plan and explore all the available investment options, as investing early can go a long way in ensuring that financial constraints never come in the way of your child’s professional aspirations.