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I am Shipra Verma fromDelhi and worked at the insurance company.

The birth of a child is one of the most important events in one’s life – other than the celebration; it brings maturity and responsibility to the parents. Planning for child’s future and managing of the finances should start much before a child is born. One can take the following steps to begin with:

  • Health insurance policy with maternity benefit: Today there are many health insurance policies which cover special maternity features. Regular maternity checkups are mounting day-by-day. Many a times this benefit is also covered by companies for their female employees.
  • Small savings: One can start saving for the future by saving some amount of money from today itself. As there comes a lot of health checkups along with a small baby like regular vaccinations and other medical check-ups. This amount is significant if both the parents are working and is helpful during the time of pregnancy when mother decides to quit working or take a break from the same.

What about the Long-term future plan?

There is this continuous struggle to deal with in India. As our children still depend on us largely as far as their future is concerned. Be it their wedding or be it their studies or carrier.

Here are some suggestions which can help in fulfilling the above mentioned duties as a parent:

1. Open Public Provident Fund (PPF) account: The moment the child receives the first monetary gift, open a PPF account in his/her name. Do ensure that whatever child receives it should be used only for his/her benefit. This will in turn ease your pressure of saving.

2. Start saving with a proper asset allocation: You should be clear on the money value of your goals before starting any saving. Goal value should be inflation-adjusted. Try to use only those instruments which provide tax-free returns like PPF and equity (through mutual funds). If the returns are taxable then the return amount will be added back to the parent’s income and taxed as per the slab in which parent is in.

3. Buy gold: Not because gold prices are going to move higher but to make it part of your overall asset allocation. If you are one of those who is having big dreams regarding daughter’s marriage – you will need gold.

4. Education: You can compromise on savings for your son’s education as one can comfortably get education loan whenever or if required. But for the daughter’s education you should save adequately as you may not want your daughter to keep on paying the education loan EMIs even after marriage.

5. Get Insured: Never buy child insurance in the name of your child. Understand the importance and purpose of insurance. It is to be purchased to manage the risk prevalent in one’s life – death, health problems, and accidents. If you want your goals to be met comfortably then proper insurance planning is inevitable. Also what is important is sum assured and not the number of policies.

6. Do proper retirement planning: If you want your children to be really happy in their life then you should do your retirement planning properly. No parent wants his/her daughter to remain worried about them after getting married. Even in the case of the son there are chances that after getting into professional life or after marriage, he may not be able to support the parents properly and if at that time you become dependent on him then it will create unnecessary pressure in your and his mind.

Parents in India are always concerned about their child's education and money required for marriage of their children. Parents will think about their children on how to do investment planning on their children and how to give security to their future even in their absence. Remember to start investing early and also regularly to build a decent corpus for your child.

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