It's 2 AM, and Sarah receives a notification on her mobile: 'Your rent is due in 5 days.' Her credit card is maxed out, and has no funds to cover the grocery bill. She is drowning in debt. Sarah's story is not unique; there are many young adults facing the same struggle. There is a need to teach kids about financial education early so that they are able to survive in the future.
In this blog, we discuss in detail why early budgeting education is important and how children saving plans prevent kids from future financial difficulties.
Key Takeaways
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Early exposure to financial education leads to great financial wellness in the future. As kids grow into adults, they get better at making informed financial decisions. Some of the benefits are as follows:
Financial literacy is a great life skill that is beyond just understanding numbers. Teaching children about finance develops good financial habits like saving money, creating an emergency fund, and investing in mutual funds or stocks. It creates a sense of control over their financial future.
Financial education helps kids understand common financial setbacks. They know the consequences of unnecessary spending, debt accumulation, or failing to save money, which inspires them to make the right choices as they move into adulthood.
Financial literacy enhances children's confidence as they learn to manage money effectively. This confidence impacts their overall sense of self-efficacy and decision-making skills. At their young adult age, they know how to manage their income, revenue, etc.
As children grow into adults, they encounter various financial challenges. Financial education prepares them for real-world scenarios such as opening a bank account, taking a loan, or making investment decisions
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Getting financial education from childhood can have various long-term impacts, including:
Person paying any sum/fees towards the education of their children can claim tax deduction under Section 80C.
Source: - Clear Tax
Every parent has a dream to give the best future for their children. Meeting their future needs, such as best child education or marriage, can be tough due to the rising inflation. It is necessary to prepare a financial plan at early stages to be able to afford the financial funding in the future. Children Saving Plan by Canara HSBC Life Insurance helps in securing your kid's future. Here are some of the reason why a child saving plan is the right choice for you:
Secure your child's future with well-planned savings and investments.
Access funds through partial withdrawals for key educational milestones.
Ensured financial stability with life insurance coverage in case of uncertainty.
Benefited from tax exemptions on premiums and maturity payouts.
Build a strong financial foundation with long-term growth and assured returns.
Financial education is a fundamental skill that equips children with the knowledge and tools to make sound financial decisions. Early exposure to budgeting, saving, and investment concepts helps prevent financial struggles and promotes long-term financial stability. By teaching financial literacy and investing in Children's Savings Plan, parents can ensure their child’s future is secure and financially independent.
You can invest in investment plans such as ULIPs, SIPs, Fixed or Recurring Deposits, Sukanya Samriddhi Yojana, and Public Provident Fund (PPF)
Some plans are subject to taxes, while others are not. Here’s the list to refer to:
PPF & SSY: Tax-free
Mutual Funds: Taxed based on capital gains
FDs & RDs: Interest is taxable
ULIPs: Tax-free under Section 10(10D) if conditions are met
There are some plans where you can withdraw partially before maturity:
PPF: Partial withdrawals are allowed after 15 years
SSY: Partial withdrawal at age 18 for education expenses
Mutual Funds: Can be withdrawn after the lock-in period
Here are list of documents
Child’s birth certificate
Parent’s/Guardian’s KYC documents (Aadhaar card, PAN, etc)
Address proof
Passport-size photographs
Yes there are some government schemes for children's savings, including:
Sukanya Samriddhi Yojana (SSY): For girl children
PPF (Public Provident Fund): Available for all minors
NSC (National Savings Certificate): Fixed-income investment option
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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