CHILD PLANS AND THE DO’S AND DONT’S

According to a survey in 2014, our country has around five cores of students who graduate and want to study further but cannot because they lack funds. This is when child plan comes into the picture. In a developing country like India, education cost are touching the sky, and if this is the situation now, I wonder what will happen when the current generation will have their kids go to college. Some years back, educational institutions raised the fees by 8.5%. If you think about this, then even the inflation rate is less than 8.5%.

If we talk about 2009, that is ten years back, then for graduation, per year a student would need 22,000. If we fast forward to five years, then the per year graduation cost was estimated to be 37,000. Which is almost double. Hence, to make sure that your child does not face such a situation, a child plan is very important.

If you go to see the percentages, the average person in India earns around 62,000 per year. And for a student, the expenditure for per year is around 2,00,000 rupees. Somewhere, there is an imbalance that people need to cope up with and hence a child plan in todays time becomes very necessary. There are many students who take loans for their education and are not able to repay it for more than ten years. If you do not want your child to go through this situation then it is best to start thinking about a child plan as soon as the child sets his foot in school.

If you think about going to a private medical school then a child plan is must. If you see graduation, then the post graduation and a specialization. The total will go above 3 crores and you do not want your child to keep repaying the loan for the rest of his life. Repaying a 3 crore loan is no joke. Even for MBA colleges, 11 to 12 lakh fees are considered to be normal in this age. So just imagine when the current generation has kids, the prices are going to touch the moon.

In these times, there is one topic where families do not really talk or have a conversation about, that is a child plan. Here are some tips on how to plan your childs future, and which child plan will help you pay for your childs education and future.

What should you do as a parent?

1. Savings: all of us have a normal savings account. Apart from that, for the child plan, you are recommended to have another savings account which should have at least six months of your salary. If by chance you lose your job, or if you have a loss in your business then this savings account will save your life. Try keeping the money only up to your six-month salary because the interest that is put upon the savings account is less than the inflation.
2. Insurance:

1. Life insurance: normally, everyone has at least one life insurance. But here, the main thing to look out for is, is the insurance money enough to support your family. This is a very important step in your child plan because god forbid if something happens to you then the money should support you children and/or family for at least the time till they do not find another source of income. One of the best life insurance to take when you are thinking about your child plan is the term insurance. Term insurance is a very cheap yet very good life insurance and you can insure twenty times your income in this term insurance. Imagine if you earn ten lakh per yera, then you will get two crores as your insurance money. This money will elp your children in their education, marriage etc. hence, while thinking about child plan, you must first make sure you have a good life insurance. As the head of the family, or as the earning member, it is your responsibility that if something happens to you then your children must get enough amount that their lives may go on without any hurdle and if there are some plans that you wished to do but could not, like education or marriage then that is done as well.
2. Medical insurance: we all know this, life is unpredictable. Illness does not wait for an invitation to come. And when they come you have lakhs of hospital bill pending on your name. As a child plan, you must take this into consideration because you do not want any additional expense. Make sure that all members in your family have medical insurance under their name.  

When we come to investments, there is always a saying. Do not put all of your money in one basket. The simple meaning of this is that do not invest all of your money in one place.  Rather scatter your investment. While thinking about child plan, you have to make sure all of your investments are correct and in the right place.

If your baby is 2 years old today, and if you are thinking of a child plan, then you will have to invest long term because you will not be touching that money till the child is 18-19 years of age. PPF is a great optionfor your child plan. The interest rate for PPPF is around 7.5% and you have to invest one lakh rupees per year. And after a span of fifteen years you will get a lump sum of 31 lakhs which is a pretty good amount for your child plan goals. This amount is good enough to support the dreams of your child and fund his higher education. The lock-in period here is 15 years and you will not be able to touch the money for that time. This is the only backdrop of this, otherwise this is the safest kind of insurance for your child plan.