Hyderabad: Knowing how and where to invest your hard-earned money is a whole new ballgame. Parents work hard to see their children well settled, but many of them are not aware of financial planning. It's never too early to start planning for your child's future.
In today's scenario, investing your money in the right places is important to survive any unforeseeable event and unprecedented situation. Most parents rely on financial planners to build a bright future for their children.
Every parent's idea of ensuring a perfect life for their children is more or less the same. We are willing to make necessary arrangements for our children's future since we want them to have the best in every sphere of life be it - higher education, marriage or buying a new house. However, having a mere idea is not enough. Our ideas should transform into a practical action plan.
As we all know, gifting children is a traditional practice in most families on many occasions. Parents have a moral obligation to their children to provide him/her with financial security to ensure their better future. Some precautions should be taken for this while some arrangements are mandatory.
Parents should keep the will ready
Wealth creation is the key. It should not be forgotten that it is more important to pass on the wealth to one's legal heirs without any complications. It is advisable for everyone to write a will for the same. A will is a legal document that states to whom the wealth should be transferred after one's demise. Most people mention the names of their spouses and children in the will. Some people make a will allocating some properties to their close relatives. By writing a will and registering it, you can avoid future disputes between family members. Remember that the first financial gift one can give his/her child is a will.
Health insurance
It is advisable to take out a full family floater health insurance policy as soon as the child is born. Medical expenses are increasing day by day. Without health insurance, these costs are hard to bear. In case of unexpected illness, there will be difficulties in providing good treatment. Change them from Family Floater policy to their own personal policy when they reach a certain age. If the policy is taken at an early age, no medical examination is required.
Involve children in financial decision making
While taking financial decisions, it is a good idea for parents to discuss them with their children as and how their impact is going to be. It motivates them to think for themselves in financial matters. How personal financial plans should be chalked out? They can understand all the benefits as they were involved in financial planning. Knowing your assets and liabilities would be an added advantage for them. Since they are aware of all these there is no need to be scared when something unexpected happens. By making children partners in financial matters, they will get to know the real situation clearly.
Provide debt-free life to children
Debt is a liability. It should not be transferred to children. This will hamper their development. Whenever a new loan is taken, there should be a backup plan to repay it. It requires allocating money or taking out a loan cover term policy. These insurance policies cover all debts owed to someone. When a loan is taken, it must be repaid on time. It is not right to take loans beyond our capacities. When you see children without any debt burden, they will strive to increase your wealth manifold.
There should be no idea of dependency on children after retirement. Retirement plans should be made to meet the financial needs of retirement life. Appropriate investments should be made for that. Children should be encouraged to invest from an early age. Only then will they be able to achieve financial freedom quickly.
Financial security
In the event individuals do not insure their lives, the chances of their dependents ending up facing odd situations are high. Here's where life insurance policies are important. A person takes care of the family's needs without any hassle all those days he was earning. But, unfortunately, in the event of any unforeseeable event, everything will be reversed. To avoid such issues, one needs to take term insurance for a reasonable amount. This will ensure the child's education and other needs without any hassle.
