About Child Future Planning
The arrival of a child brings in a lot of happiness. At the same time it also brings along many responsibilities. All of us are responsible when it comes to our children, but uncertainty could collapse the financial health of a family any time. It is sensible to save money for the children’s future and keep them financially secure even during our absence. So steps must be taken to ensure that this does not just end up in a dream.
Raising a child is no child’s play 65% of the parent’s spent over a half of their yearly income of their child education and extra co-curricular activities
As parent we may not control of our child dreams. The can be to become a rocket scientist or the next ‘Indian Idol’. We can never know what fuels their imagination and what plans do they make for themselves.
As parents, all we can do is back their dreams & provide financial support whenever needed. This is why we have to start planning early for our kids
Frequently Asked Questions
What is the target year and how many years is the course of study that you are planning to save up for your child?
You need to start off by setting the target date for your child’s education plan. I feel the average age when a child goes for Higher education can be taken as 20 or 22. You need to fix your target age depending on your expectation and circumstances.
How much is the education cost going to be when your child starts higher education?
Please find an illustration below of how education expenses could rise with passing time due to inflation:
| Private University in India | University in the US | |
|---|---|---|
| Current Cost of College (incl Hostel) | 3 Lakhs/year | $65,000/year |
| Annual Increase in College Fees | 10% | 3% |
| Cost of 1st Year in 2030 | 8.3 Lakhs | 87.3 Lakhs |
| Cost of 2nd Year in 2031 | 9.1 Lakhs | 92.5 Lakhs |
| Cost of 3rd Year in 2032 | 10.1 Lakhs | 98 Lakhs |
| Cost of 4th Year in 2033 | 11.1 Lakhs | 1 Crore |
| Total Cost for 4 Years | 38.6 Lakhs | 3.8 Cr |
| Monthly SIP required | 8,300/month | 80,400/month |
Estimating the returns you can generate & what Investments options should you choose for your child?
In this step where every investor has different levels of risk-taking ability and knowledge, it’s important to depend on these factors. These factors would let you choose different investment arenas so that you can generate good returns through it. Below table will provide you some idea about products available with their features.
Our wealth coaches are highly trained to guide you in developing proper child education or marriage planning considering all related & considerable factors like inflation, adequate insurance coverage for bread-earner, risk appetite etc.
Aren’t we making a mistake buying a life insurance endowment plan for child education Purpose?
Not all insurance policies are the same. If you intend to save for your child’s education using insurance, be aware of what type of polices you are buying. Just because a policy acquires surrender value over time does not mean it is a “savings plan” and most certainly, not a savings plan for the purpose of your child’s education needs.
Why not consider a “Structured Education Plan”?
If you are not into investing or are time-challenged to manage the finances and savings for your child’s education, you can consider buying a “Structured Education Plan” designed by our wealth coaches.
Generally, these plans are designed to make a provision of cash payouts at yearly intervals when the child begins higher education (e.g. age 19, 20 and 21 and so on). Some plans can even payout earlier when the child starts primary school with additional insurance features packaged in such as waiving of premiums should the parent be disabled while saving for the child’s education.
