All parents want to achieve the best for their children. They minimize expenditure on their pursuits and reduce expenditure on themselves to fix a future for their children. Whether you have a child who is just graduating from college or has some years before they go on to school, you’re probably thinking ahead of what you can do to help them get started on the right path.
Several forms of financial support can be provided to your children if you plan to invest in good saving plans. You might provide them with money for rent, tuition, books, transportation, job-hunting expenses, meals, and so on – these are all common examples where parents decide to lend a helping hand.
Moreover, it’s never too early to start thinking about your child’s future. Financial planning for your children is the way to go, especially if you want them to have a more stable life in the future. There are various ways for parents to start preparing financially for their kids right from the birth of the baby.
Although not all may be feasible or easy, some ways such as saving plans can help you create a solid foundation on which you can build your financial future.
How Does a Saving Plan Help Prepare for Your Child’s Future?
While a savings plan allows you to accumulate funds for future requirements, you might not be aware of the benefits that it proposes for your child.
Here’s how saving helps you prepare for your child’s future the right way:
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Financial Support for Your Child’s Future
Saving money for child education requires planning. You can get a good head start by saving up some money in a child’s savings account. This can be a great way to offer your child a financial safety net in the future.
Child savings plans are long-term investment options for your child’s future, designed to tackle the uncertainty in the education and career choices that your child desires and accumulate a certain amount for educational needs that can be utilized for your child’s growing needs.
Investment in saving plans for a child is done in installments, and a lump sum amount is granted when the plan matures upon your child reaching a prescribed age which is to be mentioned in the child investment plan.
2. Comprehensive Life Coverage
If you want to make sure your children are taken care of should anything happen to you, you should consider purchasing a child plan. It makes sure the coverage is continued even if any uncertainty takes place.
In the event of the death of one parent, the remaining parent and child can claim compensation from the policy. Also, if both parents pass away, the remaining period is waived off, but the child still gets to enjoy the benefits and manage their expenses.
This comprehensive life cover ensures that your child’s future is safe no matter what. Even in the unfortunate event of your demise, your child will be able to conquer their dreams and fulfill their aspirations because you prepared early on for them.
3. Allows Partial Withdrawals
Child plans have partial withdrawals that help you meet the short- and medium-term financial requirements of raising a child. When your child nears certain key milestones like finishing high school, getting into college, or taking competitive entrance exams, this facility can come in very handy.
Investing in a child savings plan can also reduce your financial burden. Your money grows until it’s used to pay for educational needs, and then periodic payouts are made from the accumulated interest on your original investment.
4. Several Tax Benefits
While saving for your children’s future, you can claim tax exemption on premiums paid in child investment plans. The maturity amount will not be taxed as per the Income Tax Act of India, 1961. It offers a deduction of up to Rs. 1.5 Lakhs in a financial year, which allows you to save a considerable amount of money on taxes.
How to Choose the Best Saving Plan for a Child?
Now when you know the importance of having a saving plan for a child’s future, you may want to invest in it as early as possible. However, there are certain things that you should keep in mind before choosing a plan to make your purchase satisfactory:
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Know Your Goals
Inflation rates are hard to predict, but when estimating how much money you will need for your child, you should anticipate that prices will increase in the future. It’s important to get a sense of how much you would need for education, marriage, or any other goal of your child.
2. Include Premium Waiver Benefit
If a parent dies, the insurance company will automatically reassess the premium schedule. If the child is still alive, they will continue to pay premiums on behalf of the child. This can ensure that benefits are not reduced or canceled prematurely.
3. Understand the Costs Involved
If you’re looking for a new plan, you should know that the costs will vary from one insurance company to another. You need to compare plans carefully and choose what suits you best. Moreover, since there are so many insurance providers, you need to carefully study your options and see what fits best.
Conclusion
Every parent wants to give their child the best life possible. With so many expenses in day-to-day life, saving for your child’s future can be overwhelming. A saving plan is a great way to prepare for your child’s future education costs. Having a saving plan is the best way to get your child on track with saving, which can help them get ahead of their peers in life.
Moreover, saving for the future doesn’t have to be difficult, and it’s never too early to start. If you’re interested in setting up a savings plan for your child, make sure you do your research as soon as possible.
