Importance Of Financial Planning

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Time flies by. Soon from diapers to kindergarten to college, you’ll be wondering when and how your ‘baby’ became grew up. And before you know it, you’ll be taking stock of all your investments to provide for your son or daughter’s higher education.

So it’s only prudent to begin now when your little one is still taking his or her first steps. Financial planning at an early stage goes a long way in building a safe nest for your child’s education. Here are some generic pointers to ensure your ‘baby’ has his or her desired education:

Play school fee: Rs 10,000 to Rs 28,000 pa

Nursery school fee: Rs 10,000 to Rs 1 lakh pa

School fee: Rs 10,000 to Rs 1 lakh pa. The average increase in fee per year is nine per cent

Extra-curricular fee: Rs 2,000-10,000
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A penny saved goes a long way than a penny earned, after all.

1. Start an education fund

“That’s why I’ve been investing Rs 2,000 per month for my kids, Swara (4) and Saket (9 months-old-) right since their birth. I’ve invested in an education fund with Max New York life. The term for this fund is 15 years, so by the time they begin college, they’ll have something to fall back on,” asserts Rucha Kulkarni, a banking official.

Putting money in an education fund is one way to ensure your child’s education has some initial support. There are other options too that can prove beneficial in the long run.

2. Check out various saving plans

Advises Vikas Kabra and Ritesh Khandelwal, chartered accountants who deal in business advisory and business finance, “Unit linked plans, though high-risk, are grossly profitable in the years to come. Mutual funds and SIP are ideal for investment for children’s benefit. Like them, fixed deposits or tax-free bonds can be taken by parents for their kids. Just keep in mind that the income from FDs dedicated towards children’s savings will be clubbed with parents’ income and hence liable for tax. But yes, they are definitely a safe investment option. The best way to ensure a tension-free education period is to begin early. Even Rs 500 per month can ease your worries at the later
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You can label your investments under bank savings, life insurance policy, unit link or mutual fund and so on. However, keep in mind that to project the returns on your investment, you’ll have to make some assumptions based on the current performance of that fund/bond/policy.

4. Compare fee structures

You may think that it’s too early to tell whether your child may want to pursue his or her studies abroad. But the reality is that you can’t wait for your kid to grow up and tell you. You’ll have to anticipate this need and start making provisions for the same. So take a look at various universities abroad and their course fee structures. A clear-cut view of your goals will guide you through your savings and investment planning. What is crucial is to take stock of your investments once every year.

5. Get a second

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