5 Smart Ways To Plan Your Child’s Growth Trajectory Without Overspending

As the cost of living spirals, raising a child in these times can prove to be an expensive proposition. Inflation stood at 7.79 per cent as of April 2022. Yet, parents can take heart that raising a well-balanced child does not depend on how much money you spend.

American advice columnist Abigail Van Buren expressed it succinctly when she wrote: If you want your children to turn out well, spend twice as much time with them, and half as much money.

That said, parents who plan their finances well have a better chance of giving their children the best resources within their allocated budget. Secondly, the earlier you start planning, the more geared up you will be to give your child a high quality of life.

Taking five affirmative steps can equip parents to make smart decisions with regard to their child’s future.

Operate with an annual budget

One of the best ways to keep pace with the rising cost of living is to create an annual budget that helps you plan all aspects of your child’s journey.

• Dedicating an annual budget specifically for your child’s needs paints a realistic picture of expenses.
• If you have more than two children, work with multiple budgets because children have unique needs.
• The key heads to include in the budget include school fees and supplies, medical needs, food and groceries, extra-curricular activities and toys, clothing and shoes, birthdays, and a surplus amount dedicated to miscellaneous expenditures.
• Use an online calculator to estimate expenditures over several years.
• You can also use a money management app to track expenses. This ensures you never go over budget.
• Involve your kids in budgeting activities as it allows you to bond and seed financial awareness in them early on.

Consider online schooling

A growing number of parents today have shifted to online schooling due to the overall quality of delivery and the affordability factor.

• This mode of education is gaining popularity due to the high quality of learning offered through a tech-enabled online interface, which combines superior learning resources, classroom lectures, individualized learning, and self-learning.
• The value-for-money element is a big draw. For instance, the 21KSchool, which offers state-of-the-art online schooling, gives students a choice of an Indian, British or American curriculum.
• Online schooling also paves the way to engage with peers worldwide, thus instilling in children the analytical, collaborative, global mindset needed to succeed in the new world of work.
• Online school admissions also tend to be streamlined and transparent.
• The benefits of cost savings from not having to pay rent, utilities, and staffing bills, are passed on to parents in this school model.
• Online schooling also reduces children’s need for tuition due to how the entire framework is designed. Savings in hefty tuition costs can be channelized into a college education fund.

Strategically reduce child-care costs

As they say, it takes a village to raise a child. Child care has a growing cost attached to it. It also means that your child will spend more time in the presence of strangers. Here are some steps parents can actively take even before the birth of their child to address this concern:

• Workplaces today offer child-care options as part of employee benefits. This can be in the form of safe and secure onsite crèches or an allowance. Keep an eye out for this option when interviewing for new positions.
• Build a strong support ecosystem of friends and family members who are invested in your child’s well-being. Support can also translate to paid child-care options with someone you trust or core family members doing it pro bono.
• Connect with fellow parents of children of the same age and actively cultivate the practice of play dates and activity weekends. Not only will it enhance the quality of your child’s life, but it also translates to savings in the long term.

Invest in your child’s health

Good health and wellness are a top priority for parents. Here are some ways to bring down costs and enhance health trajectories:

• Paediatrician, vaccination, and hospitalization costs, collectively amount to 22 to 30 per cent of the annual budget allocated for your child’s well-being. By investing in a health insurance plan, the cost of hospitalization can be drastically reduced.
• In a volatile economy, the possibility of job loss is a reality. Even if your company offers a health insurance plan, it is advisable to take a private and government-backed plan simultaneously. Buying health insurance for two to three years instead of just one year also significantly lowers costs.
• Build a culture of high-nutrition, home-cooked meals to help boost your child’s immunity. Reduce the culture of eating out and encourage healthy eating habits. This practice translates into enhanced physical and fiscal health.
• Ensure that your child cultivates a habit of exercising daily, which keeps the heart, mind, and body healthy. Exercising along with your child can also be a strong bonding activity.

Make your money work for your child

Saving is good, but investing is even better. This practice harnesses the power of compound interest. Here are some ways to grow a dedicated nest egg for your child’s welfare:

• Consider opening a PPF account in your child’s name, as it is one of the best investment schemes, entirely exempt from taxes and earning an annual interest of 7.1 per cent. Parents can be guardians until their children turn 18. PPF account holders can extend their account tenure after 15 years, in blocks of 5 years.
• Parents with girl children should take advantage of the Sukanya Samriddhi, which offers a 7.6 per cent interest rate and a tax exemption under 80C.
• You can also explore investment assets such as mutual funds and digital gold investments, which compound over time and can translate to your child’s college fund. Consistently investing will help grow your corpus and make you feel more secure about your child’s future.
• Build an emergency fund of living expenses for three to six months, which can be used in a crisis without having to drain your investments.

In conclusion

Reducing the cost of raising a child is a byproduct of a cohesive strategy. By following these steps, parents can derive higher value from their decisions and offer their children a roadmap for happiness and success.