The Cost of Raising a Child

There are many costs associated with raising a child. The cost of raising a child up until the age of 21 can be staggering, according to a survey done by the Times of India. It might be a staggering 1.7 crores, assuming a 6% inflation rate. To cover these costs and make sure your child's requirements are met, financial planning is important.

Understanding the Major Expenses

Even though the overall cost could seem expensive, it's critical to understand how expenses are distributed. With almost 59% of all costs going towards education, it becomes clear that this is the most important expense. This indicates that roughly 40 lakhs of the 67 lakhs that are assumed will go towards your child's education in school, at the university, and in college.

How to choose the Right Child Education Plan

The major education milestone of a child starts when they complete their 12. At this point in time, your child is likely to be 17 or 18 years of age. As a parent, you should plan the period of your investment linked to the age of your child, and it is recommended that you save until your child turns 17 years of age.

The first and foremost thing is to identify the funds required currently for higher education. This will help you estimate the amount required in the future, which is calculated by inflating the current cost of education for the defined period. A simple thumb-rule to estimate this cost for the desired course is by doubling the current amount after a period of 10 years. A financial advisor can help you estimate the amount needed for your child depending on their age and the current inflation. However, the other important consideration is also the amount you can afford. It is recommended that you save at least 5-10% of your monthly salary towards your child’s education.

Up to class 12th, education expenses form a part of the monthly household expenses. It is post class 12 that the expenses rise sharply and cannot be met through the routine monthly household expenses. Professional education like medical science, engineering, computer science, and MBA cost higher. Your child’s first important education milestone is when they are completing graduation. Most graduation courses vary from 3 years to 5 years. You can safely assume that you will need money for 4 years. Also, keep in mind that a higher sum of money is required immediately after the child finishes their 12th board exams, usually for application fees to various courses, entrance exams, hostel fees, travel, etc.

This is the most important question while planning for your child’s education. Education should remain uninterrupted even after the death of the parent. Child plans offered by various life insurance companies score higher than other alternatives such as fixed deposits and mutual funds because they offer a significant amount of structured protection, which helps the family in case of the death of the earning parent. A good child insurance plan offers a lump-sum payment on the death of the policyholder, but the policy does not end. Also, all future premiums are waived, and the insurance company continues investing this money on behalf of the policyholder. There is an amount given to the child every year to fund the school education, along with the money pre-decided for specific milestones towards higher education. In this way, the parent ensures that their child's needs are taken care of even when they are not around.

The Solution - Generali Central Assured Education Plan

It's crucial to think about appropriate financing requirements if you want to handle the costs of your child's education properly. The Generali Central Assured Education Plan from Generali Central Life Insurance does just that by assisting parents in making regular savings for their children's future. This plan offers several advantages, such as:

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Conclusion

Planning for your child's future is a responsibility that requires diligent financial preparedness. By understanding the significant expenses associated with raising a child and opting for suitable financial solutions like Generali Central Assured Education Plan, you can ensure your child's educational needs are met without undue stress. Start your financial planning today and secure a bright and worry-free future for your little one.

Disclaimers: For detailed information on this plan including risk factors, exclusions, terms and conditions etc., please refer to the policy document and consult your advisor, or, visit our website before concluding a sale. Tax benefits are as per the Income Tax Act 1961 and are subject to any amendment made thereto from time to time. You are advised to consult your tax consultant. Generali Group’s and Central Bank of India’s liability is restricted to the extent of their shareholding in Generali Central Life Insurance Company Limited.