Joseph and his wife Nalini always wanted to give their daughter Natasha the very best in her life. From sending her to the best school (and college later on) to enrolling her in all her favourite extra-curricular activities, they never fell short of providing her with the best. However, when Joseph suddenly fell Ill when Natasha was just 10 years old, it was up to Nalini to run the house and also provide for their child. The expenses had to be curbed. However, there were no cuts in Natasha’s lifestyle. How was that possible? Well, thankfully the couple had started saving money for their child from the time she was three months old. They had a separate savings account for her and they also had a money back plan for her. A wise decision taken years ago paid off for the couple at the time of a need.
If you too want to build a protective cushion around your child and give her nothing but the very best, start saving for her education right away. Read on to know exactly how you can go about it.
Saving money for your child
There is no question about it – you have to save for your child’s education. Education costs are constantly rising and if you don’t plan ahead, it will become very difficult for you to provide the best possible education for your child later on. So start saving early and build up a healthy corpus. There are various ways in which you can save for your child’s education. They are:
- Invest in a child plan – This is the best way to save for your child. Child plans are effective insurance policies that not only build up a corpus for your child’s future, it also insures your life and assures your child will be protected even if you die prematurely. You can even opt for a money back child plan and get financial assistance at specific intervals like your child’s school admission, her college admission and her university admission. Such plans are long-term plans and so you can build up the corpus gradually without having to strain your finances all at once.
- Open a bank account – Many banks these days offer junior accounts. These accounts are joint savings accounts that you can open with your minor child. The child will also be a co-account holder. Not only do these accounts help you save money, they also help in making your child financially responsible from an early age. These accounts are also useful to bank the money the child receives in gifts, scholarships, etc to use in her later life.
- PPF – PPF or Public Provident Fund is an excellent savings tool for your child’s future. You can invest in small amounts and get high yields. PPF accounts also contribute towards tax savings, which is an added advantage. You can contribute up to ₹ 1.5 lacs annually. The money is locked in for 15 years after which your child can withdraw it to fund her higher education.
Why you must save for your child’s education
To understand this, let us take a look at the table below:
Type of Course
COST IN 2016
COST IN 2036
|MBA||20 lacs||75 lacs|
|Medicine||1 lac||38 lacs|
|Law||5 lacs||10 lacs|
|Engineering||5 lacs||20 lacs|
So as you can see, education costs are rising rapidly, much faster than the rate at which your income is rising! It therefore becomes absolutely essential for you to start saving for your child’s future at the earliest. Life is also very uncertain and you never know what unforeseen incident can strike you in the near future. So be cautious and build up a corpus which can help your child to fulfil all her dreams in life. There are many options to choose from and you can definitely find a saving tool that would suit your pocket.
Speak to your financial advisor and see what savings option suits you the best. Once you find a suitable option, go ahead and start saving. Tomorrow your child will be able to reap the beautiful benefits of the wise decision you take today.