All across the world, parents are concerned about the future of their children and work hard to secure it through good education and other ways. Parents in India are hardly an exception, yet many of them neglect to make adequate financial plans.
A parent's work has become more difficult as a result of micro and macroeconomic risks like rising inflationary pressure, the weakening of the Indian rupee, and the potential for a worldwide recession.
Here are a few ways that can help you secure your children’s financial future:
- Do not delay investments: Early investment planning can give you enough time to invest for your child while also allowing you to diversify your portfolio and allocate more assets to equity for higher returns. Parents make the most common mistake of assuming that they have enough time to fulfil their financial goals and delay investing in their child’s future.
- Determine short-term and long-term goals: It is important to invest differently to save for schooling funds and a fund for higher studies as not every financial goal has the same maturity. Goal-based investing is based on specific requirements, time horizons, and risk-to-reward ratios. Thus, in order to safeguard your child’s financial future, it is essential to establish short and long-term goals.
- Efficient asset location: Your ability to invest according to your objectives, preferences, and risk tolerance depends on efficient asset allocation. You can be sure you'll have the appropriate investment returns at maturity by allocating your assets based on your goals. You have a variety of options, including mutual funds, fixed-income instruments, and more, depending on your goals.
- Insurance: Don't forget to include children in your family's health insurance floater. As vital as setting up enough money for your child's future is having proper health insurance. Children are prone to various diseases and at a young age there are high chances for them to get them while playing or due to infections and the treatments can become financially difficult so, taking insurance is a must.
- Teach financial literacy early on: As a parent, you must instil in your child a knowledge of financial literacy if you want them to become a financially independent adult. Your obligation to impart financial literacy to your kids will educate them on how to value and manage their money.
