Parents around the world are concerned about their children’s future and strive to secure it through quality education. Indian parents are no exception, but most of us don’t realize the importance of financial education/literacy which has a great impact on a child’s future. 

Various macro and micro economic uncertainties – rising inflation, currency depreciation,

recession, and more – which plague almost every country now and then – have an impact on our present savings and investments which has made the job of parents harder. Here, we will look at different ways parents can do better financial planning for their children –

Start investing

Every drop contributes to the formation of an ocean.! Most of us underestimate the importance of consistency. Just 1000 rupees per month invested into SIPs consistently over 20 years at average returns of 10% can yield INR 7,59,000.

So, by the time your child is ready to graduate, you will have a corpus of approximately INR 7.5 L ready to invest in their future!

Early investment planning  for your children can provide you with enough time to save and invest at your own pace and diversify your portfolio with better asset allocation to get higher returns. Any delay in investments by parents happens mostly because of time bias. Parents assume they have enough time to realize their financial goals but fail to begin on time or stay consistent over the period.

Long and short-term goals

Financial goals are unique. As a parent, you will need to invest separately for school funds, college funds, or higher studies funds. For instance, a Master’s in literature would be less expensive in India than a Masters in the UK. 

Therefore, it is important to realize how you need to save and invest to achieve short-term and long-term goals to secure your children’s future. Therefore, you need to focus on fixed deposits for short-term goals and on SIPs, stocks etc. for long-term goals. 

Diversify

You must diversify your investment portfolio to get high returns at minimal risks. You can’t put all your eggs in one basket if you want the maximum value for your money. For instance, if your child is just a few months old, you will have to save for his school and tuition fee – which is a decade-long process. Thus, you need to save consistently to realize this goal. You could also consider buying gold now to use as assets for 15 or 20 years later for their higher studies, wedding expenses etc. 

Buy insurance

Consider adding your children to your family’s health insurance floater plan. Securing adequate health insurance for your children is part of financial planning for their future. Any critical medical occurrences can put a dent in your life – emotionally and financially.

With so many allocations to make, it sometimes becomes difficult to have the funds you need to execute your financial planning. The most ideal option then is to apply for a personal loan for education. IndusInd Bank provides instant personal loans at interest rates as low as 10.49% with no physical documentation and a 100% paperless end to end digital application process. 

With a personal loan, you can access immediate funds which you can allocate to various avenues to initiate financial progress in your children’s life. The responsibility to educate your children about financial literacy lies with you. 

Visit our website to know more about personal loan eligibility and benefits, and jumpstart your children’s financial journey today.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.

Before the pandemic, Madhula went on an international trip every year. She loves traveling and has visited 22 countries, so far. She regularly allocates a part of her salary for a separate travel fund – apart from her other allocations. However, during the Covid-19 pandemic, faced with pay cuts, she could not save enough for her next trip as investments and savings took precedence over everything else.

With the pandemic fears ebbing the world over and travel restrictions easing, Madhula is keen to travel to Jordan and Israel this New Year. She is thinking of applying for a personal loan to meet her travel expenses. An editor by profession, she looks at things in minute detail, and her decisions are well thought out and not impulsive. She weighed all the pros and cons of taking a personal loan for her next travel, as dipping into her investments and emergency funds was not an option.

Here’s a list of reasons why Madhula decided a personal loan is the best choice to fund her vacation this New Year

Affordable

Madhula did a thorough research and found that a week-long package to Jordan would cost her INR 60,000 in flights, approximately INR 40,000 in hotel accommodation, another INR 15,000 in food and 20,000 in exploring the hot spots of the country. A flight from Amman to Tel Aviv would cost her approximately INR 5,000. Hotel stay in Tel Aviv would round up to be INR 30,000 and add another INR 20,000 in food and INR 30,000 in ticket costs to the city jewels and other activities. Her total travel expense for both countries is displayed below –

Her 15-day trip to both countries would cost her INR 2,20,000.

*The flight ticket cost is for a round trip between Delhi and Jordan and from Amman in Jordan to Tel Aviv. The hotel stay cost, food cost, etc. is an estimate based on the average cost for a tourist in 2022.

Considering Madhula works as a senior Editor with a salary of INR 1L, she has a good credit history; therefore, she is more likely to get this loan at an interest rate as low as 10.49%. The EMI for a 2-year loan would be approximately INR 10,500 with IndusInd Bank – an amount she can easily afford.

Cheaper than using credit cards

The alternative to availing of a personal loan was to fund her travels using credit cards. Madhula’s friend, pointed out that while her credit card has a limit of INR 2L, to be able to go on a vacation, it would max out her credit card because she needed 2,20,000! Also, she will be unable to pay the entire credit card bill on her salary on the first due date – which will be rolled over to the next billing cycles, which will, in turn, attract a higher rate of interest. A personal loan works out as a much cheaper option.

Convenience

A personal loan is easy to avail of and is also very flexible with IndusInd Bank. And the entire application process is 100% digital, making it practically instant! After successful application submission, the funds are disbursed to the selected bank account within minutes.

No collateral

Madhula had the option of to liquidate a few of her investments – like FD and use the proceeds to fund her travels. However, Madhula has been investing in FD and SIPs regularly for a long time now, and if she liquidated her investments that would mean losing out on the compounding effect of returns! And in the long term, liquidating her investments would be costlier than the interest she will pay on her loan for the vacation.

Madhula applied for a personal loan instead, and she is set to travel to Jordan and then to Tel Aviv for two weeks – her first international trip in 2 years!

IndusInd Bank provides instant personal loans for as low as INR 30,000 and as high as INR 5L. IndusInd Bank personal loans come with tenures from 12-60 months, so evaluate what works best for you. With us, any salaried or professional, or self-employed person can apply for a personal loan. Get in touch with us to check your loan eligibility and apply for one today.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.