As a parent, you want to provide the best future for your children. This can be quite a demanding task with the rising inflation and changing lifestyle. Consider the fact that India's retail price inflation rate climbed to 4.62 percent in October 2019*, the highest in over a year. Most items and objects that are associated to your daily life have continued to become more and more expensive over the years including housing, fuel, clothing and common foods like pulses, vegetables and eggs.
The rising cost of inflation may make it really tough for the coming generations to manage the varied demands of their lifestyles. However, you have the opportunity right now to work towards making it easier for your children in the future. By planning in advance and investing your money smartly, you can indeed secure your children’s future and help them fulfill their dreams.
Why is it important to save for your children?
Saving for your children can make a big difference in their lives. Most importantly, the rising costs due to inflation can be beaten with the right planning. Furthermore, a corpus can protect your children from any financial disasters in case of an emergency.
Ultimately, by saving for your children now, you will be helping them in almost all important periods of their lives. From the quality of education that they receive to becoming independent and starting something of their own, saving for your children provides them with a solid foundation that boosts their confidence. The money that you save for them acts as a safety blanket and helps them start their adult lives in the best manner possible.
The right time to start saving for your children
The right time to start saving is now as the benefits of starting to save early are manifold. The sooner you start saving, the more you can provide for your children eventually. Time is your greatest ally and even if you save small amounts now, they will automatically accumulate into a large corpus over time. The returns that will be generated on any investment that you make now may increase in the long run – that’s the power of compounding and you need to take full advantage of it. It is a prudent decision to start saving for your children as soon as possible In this way, you can ensure that every financial aspect of their lives is accounted for. However, it is never too late to start saving. Even if you start saving in your children’s formative years (1-8 years), you can accumulate enough money to help them once they grow older and their expenses increase.
Key milestones you need to plan for
There will be many important milestones in your children’s lives that you need to plan and save for. These include:
- School Education: In the recent years in India school fees have become exorbitant and are a major expense one needs to account for. A study conducted by the Associated Chambers of Commerce & Industry of India (ASSOCHAM) in 2015 had stated that private school expenses of a single child have risen from 55,000 rupees in 2005 to 1.25 lacs in 2015^. This is a steep rise of about a 150%.Now, although the fees of top schools can often be quite expensive, it is every parent’s top priority to get their children admitted in one. Ultimately, good schooling is instrumental in preparing your children for a successful future. So you must invest in it as much as you can.
- Higher Education: Higher education can be quite expensive in our country#. Specialist courses like engineering and medical science often have higher fees. Moreover, many children nowadays are choosing more off-beat career options like music or other performance arts. Since this is a relatively new trend in India, there aren’t many colleges that can match the expertise and infrastructure provided by colleges abroad. If your children decide to opt such a course, you may have to send them to overseas for further education sooner or later. As a parent, you need to support your children’s choices and passions and having a financial plan will enable you to do just that.
- Marriage: Marriage is one of the most important milestones in a person’s life. Your children might decide to get married early in life when they have just started out on their careers. At this stage they might require your assistance in taking care of their marriage expenses. Even if they decide to get married at a later stage, every parent wishes to support their children emotionally and financially as they start a new chapter of their life. Ultimately, a child’s marriage is a very special occasion for any parent and you want to celebrate it in the best possible way without sparing any expenses or making any compromises. This is why it is important to plan and save towards your children’s marriage.
Savings options for your children
There are plethora of options available to help you save for your children’s future. Choosing the right option from all the available ones depends on the kind of corpus you are trying to build and the amount of money you can commit to putting away regularly towards it. For instance, if you want your children to have ready finances available to them when they become adults, you can set up a fixed deposit account for them. On the other hand, if you want to save specifically towards their education, an education plan is what you should opt for.
Here are some options worth considering:
- Term insurance plan:A term insurance plan is a very common insurance policy used by people to secure their children’s future. In the event of your unfortunate demise, your children receive a lump sum amount to help with their future expenses like education costs and more.
- Savings plans: You can invest in an insurance policy for your child that offers life insurance along with a savings plan. For instance, ICICI Pru Future Perfect is an insurance policy that helps you secure your children’s future by offering financial protection through guaranteed savings` as well as life cover.
- ULIPs: Investing in an ULIP is a smart investment decision you can make for your children because it secures their financial future and at the same time your money may keep growing. The ICICI Pru Smart Life is one such investment plan that lets you choose an investment strategy as per your children’s specific needs. It also provides rewards for staying invested for a long duration and gives you an option to withdraw money when you need it+. These features can help you be financially prepared for your children’s various education goals and provides life cover to your loved ones.
Tips to save money for your children’s future
Here are some valuable tips on how you can save money for your children’s future:
- Start early: When it comes to saving for your children, time and consistency are your greatest allies.
- Be regular: Always deposit small amounts as and when you can, instead of waiting until you have a large amount.
- Look for added benefits: When opting for a life insurance plan, look for a company that offers added benefits at no extra cost.
- Don’t exceed your budget:The amount that you decide to save for your children should fit comfortably within your budget.
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Unit Linked products are different from traditional insurance products and are subject to the risk factors.
The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/ her decisions. ICICI Prudential Life Insurance is only the name of the Life Insurance Company and ICICI Pru Smart Life is only the name of the unit linked insurance product and does not in any way indicate the quality of the product, its future prospects and returns.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the Insurance company.
The various funds offered under this product are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.
+Provided monies are not in DP Fund. You can make unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year. DP Funds refer to Discontinued Policy Funds and consist of money from lapsed policy. ICICI Pru Smart Life (UIN: 105L145V05)
Loyalty Additions are applicable from the 6th policy year onwards. This is in the form of extra units at the end of every policy year. Each Loyalty Addition will be equal to 0.25% of the average of the Fund Values on the last business day of the last eight policy quarters. You get an additional Loyalty Addition of 0.25% every year from the end of year 6 if all premiums for that year have been paid. Wealth Boosters will be allocated as extra units at the end of every 5th policy year starting from the end of the 10th policy year. Each Wealth Booster will be 3.25% for Regular Pay policies and 1.5% for Single Pay policies of the average of the Fund Values on the last business day of the last eight policy quarters.
`Your Guaranteed Maturity Benefit (GMB) will be set at policy inception and will depend on age, policy term, premium, premium payment term and gender. Your GMB may be lower than your Sum Assured on death. ICICI Pru Future Perfect UIN:105N153V01.