Have you planned for your child’s future?

Diwali storms up the social whirlwig; food, dress up and meet up is all on cards. The usual worry of how to keep the kids gainfully occupied is thankfully averted during such catch ups. They find playmates and enjoy their time, which for us parents is a huge load off.

 This diwali, we too had some great fun socializing. A new parent couple among our friends got talking about how responsibilities are keeping them engaged. Life has been very different after their child’s birth and one responsibility they can’t get a handle on is money planning. More discussions among the group led to finding out that it is a rather widespread question, parents are grappling to figure. It obviously became imperative that a blog post covers the topic of planning our children’s future.

Before setting out on a task, we have to understand what is it going to achieve. So parents unanimously voted Education and Marriage as goals to work for. Both are gargantuan expenses and require disciplined action. Depending on your age, children’s age, your risk profile, choice of education field and costs involved you will have to ascertain a sum required after a said amount of time. We are mentioning the tools you can use for investing. 

SIP

When you keep a horizon as long as your child’s growing up years, SIPs in small to mid cap funds and balanced funds are your best bet. They let your money gain with the benefit of compounding year on year. For those with some risk appetite, consider funds which invest a considerable part in equities of growing companies. Balance funds are slightly less risky because they have equity and debt (such as term deposits, bonds) instruments both.

For the uninitiated, SIP is Systematic Investment Plan better known as ‘the good EMI’. You invest every month a fixed sum as small as Rs. 500 into a mutual fund. The fund is managed by a team of experts and they in turn invest in various instruments to generate returns. We have more posts on MFs coming momeys 😄


Sukanya Samriddhi Yojana
This has to be our favorite for those who have daughters. The scheme encourages parents to build a fund for the future education and marriage expenses for their female child. The scheme currently provides an interest rate of 8.3% p.a. (new rates are likely to be announced). It allows deposit upto Rs. 1.5 lacs in the name of your daughter every year and it matures when she reaches 21 years of age. You can either choose monthly or yearly contributions. Momeys should absolutely consider monthly contribution!

Insurance

Well it’s not our favorite, but we have to bring it into discussion to give you our reasons. If you search online for children investment options, you will find a gazillion ads by Insurance companies luring you with child plans. What should you do? Well our advice would be to ignore. They are mostly selling ULIPs to you which are far inferior in returns to mutual funds and charge expensive premiums. You might as well directly invest in MFs through SIP.

However, we have to add that you must take insurance, as life cover to safeguard your family and children in an unlikely event.

Gold ETFs

Gold ETFs are exchange traded funds that passively track the performance of Gold Bullion. These funds buy gold with investor’s money (on the behalf of investors) and convert it into units. 

Gold Exchange Traded Funds can also be an option if you want to invest for using them during marriage. These are traded on stock markets and are a great alternative to physical gold.

With children, you wouldn’t want to take a chance. So invest today for their tomorrow.

Millennial Mom

Have you often caught yourself saying, “Life’s one heck of a bitch right now”. Finding your plates too full or sometimes too much to juggle between – you must be a Millennial Mom.

Millennial Moms have unconventional jobs, role demands, work schedules, and therefore a much higher need to be financially savvy. We are doing a series on how Millennial Moms with varying roles should be dealing with money. Here’s the piece for our first role.

Role 1: Moms who run the Media

Graphic Designers, TV anchors, Executive Producer, Creative Directors, Director of Photography… These mom’s have challenging careers and work differently from regular employed workforce. The work comes in erratic shifts, for days at a stretch sometimes and sporadically.

Most times work comes on assignment basis in the creative field. While the pays are handsome, the receiving g date is not fixed like the salary. How can one then make the best calls in managing money. Here’s a practical guide.

Pay yourself first

Freelancers are very much like the entrepreneurs. It is important to reward yourself to keep going. Take aside your salary to last you your next expected payment before you use it up in clearing the dues.

Use apps to track your payment or follow ups

A hard part of freelancing is deferred payments which you have to diligently follow up. The right apps can keep reminding you for follow ups and keep a note of your money reserves vis a vis expenses.

Emergency fund

We can’t stress more about the need of emergency fund for everyone and its even dire if your pay-checks are irregular. Emergency funds can be limited for salaried individuals who have medi-claims and other cover. But it’s critical if you are independent.

Using the upfront payment mode

When making large purchases like car, camera and heavy equipments, prefer to use the upfront payment option. Since you can time the purchase after a big payment credit, paying lumpsum will earn you rewards like bigger discounts and cash backs. You also avoid the EMI headache and heavy interest rates charged on taking loan.

Don’t compromise on Investment

Not having regularity in payments should not become an excuse to not invest. Make lumpsum investments if recurring is not possible.

Financial Advisor

The financial terms may scare you or you may be very busy to figure the investment tools. Also in freelancing, there are no employee benefits like PF, Gratuity etc. you must engage an advisor to plan your insurance, retirement and other investments.

Get a life cover

A lot of people misunderstand Insurance as an investment tool only. While it can give returns but primary use of Insurance should be of covering your life. Absence of life cover and medi claim can land you in quite a spot in case of any uncertainties.

​Tax saving options for Women

Taxes are inevitable whether you are employed, partner in family business or an entrepreneur. Tax planning is important to ensure your earnings don’t suffer from heavy tax outgo-s, last minute rush or late filing penalties.
Moms, today we are sharing options for availing tax deductions so you make use of right options well in time and save up on taxes.
Tax Deduction
Section 80C of Income Tax Act allows for a deduction of up to Rs. 1,50,000 for investing in tax saving options. Two most known ones are Public Provident Fund and Employee Provident Fund. Let’s look at some other options.

5 year deposits: If you don’t want to take too much risk, invest in 5 year deposits with any bank or post office. You can’t get deductions upto Rs. 1.5 lacs under Section 80C. 
Sukanya Samridhi Yojana: For girl child below 10 years, SSY can be taken where you can deposit upto Rs. 1.5 lacs each year for a fixed return of 9.2%. The best part is both interest and maturity amounts come tax free. The lock in period is 11 years for this scheme till your daughter reaches 21 years of age.
ELSS: Equity Linked Savings Scheme give you tax exemption while giving you attractive returns. The fund is managed by professional managers so you don’t have to worry about market movements, ELSS have a lock in of 3 years.
Life Insurance: If you are a primary or an equal earner in the family, then you must consider getting a life cover through life insurance. The government allows for a max amount of Rs. 1.5 lakhs to be deducted annually for tax benefits.
National Pension Scheme: Working women who would like to save for retirement should consider NPS. There are 3 distinct profiles for you to map your risk profile: Equity, Corporate bonds, Government securities. The exemption you get for NPS cannot exceed Rs. 1.5 lacs annually.
Home Loan: Home loan repayments can get you tax deductions and in 2 ways. There is deduction allowed upto Rs. 1.5 lakhs in principle amount and upto Rs. 2 lakhs in interest repayment. You must make use of this even if you are a co-worker along with your husband.
Also find from local registrar office, if there is a stamp duty concession for women buyers, which is usually around 1-2%.

There could be a marginal rebate of .05% on home loans for women which should be checked with the lending bank.

Be a smart mom in saving your tax because Money Saved is Money Earned.