I have always been a cautious and disciplined person when it comes to savings and spending money. It was always a very important lesson that my parents taught me as a part of my upbringing.
Savings are important for many reasons like safety and security but until I was a parent it never occurred to me to save from a point of view of planning ahead for major expenses.
Me and my husband always believed in saving some but we were more of spendthrifts in the initial years of our marriage. But as they say being a parent changes a lot of things (and mostly for good). Out of many other things we were excited to explore as parents, savings was one of the most important things. By god’s grace we did not have to bother about the basic needs and savings but still we wanted to make small savings for her as token of love (and god forbid, who knows someday this might help us to be prepared for any expense for her, if in case future financial situations might not be as green as ever).
Here I am going to talk about how you can just follow few steps and start your savings, how we are taking baby steps to save a tiny bit. And also a little about few investment schemes that we have invested in ( and also a few other generic investment options that you can consider as a parent).
So let’s get started and let me first talk about few steps that you should follow when you start your savings.
Decide a goal:
In our case, we are saving in general without any specific goal, but you might want to save for your child’s education, or higher education, or marriage.
You can have multiple goals and your investment schemes will vary depending on if it is a long term or short term goal.
Do your research:
It’s very important to have a rough idea about how much money you would need to achieve your goal, what are the different investment options, growth rate, and how much return it gives. ( even if you consult a expert, it’s always a good idea to do a little research for yourself). By the end of this you will have a rough idea of how much you will have to save.
Plan your savings:
Once you have a rough idea start with writing down your fixed expenses and side ways write down expenses that you can work on (like entertainment, travel, leisure). And by doing this you will get an idea of how much you can save every month for your goal
The final step is to invest your savings, now this completely depends on your personality and your approach of investments. Always consult and expert before making a decision.
Moving further let me share with you the small things that we practise to make small savings: ( all these ideas are my dear husband’s and I am so glad he brought this in practise)
– So every month we get a small one gram gold coin. (Which is not that heavy on pocket, average an amount of 3000-3500) which at the end of year sums up to a 12gm gold.
– There are times when we have a busy week or we do not go out for a fancy dinner or outings and we save some money on our monthly entertainment expenses, we put that amount to her piggy bank.
– Any gift given to her in cash by friends or family goes to her piggy bank, we do not spend a penny (not even on her) ( typical Indian habit) .
– We have decided to open her piggy bank every six months or yearly and double the amount and make an investment. (This practise was followed by my husband’s grand pa, and he believes it encouraged him to save more)
– Any money below rs 10 we make it a point to put in a box and to my surprise i always see it to be a minimum amount of atleast 1000/- or so more every month. Which goes to her savings. (Never thought the most ignored chillar will be a saving too).
Please note that these are just small things that we do to have some additional savings on our personal ground. These might not just be enough to achieve the bigger goals of your child’s life. Savings always are directly related to the goals you want to achieve and your financial stability.
Also, according to my study for small investments on my personal level for Mi, I have listed a few options that you might consider for your child too:
PPF– This is popularly knows as Public Providend Fund. It is a tax free saving scheme by Government of India. Government currently offers 7.6 percent per annum on the amount invested. The amount invested in PPF matures after 15 years. Maximum amount of Rs. 1,50,000 can be invested per annum in PPF and minimum of Rs. 500.
Sukanya Samridhi Yojana for Girl child– This scheme is for girl child by Government of India. It is again a tax free savings scheme by government of India. This scheme is for 21 years.
Minmum investment- Rs. 1000 per annum
Maximum investment- Rs. 1,50,000 per annum
Current rate of interest- 8.1%
Mutual Funds– They can offer the best returns if invested for a period of 10-15 years. The returns can be around 12 percent. Mutual funds don’t offer any guaranteed returns as they invest in equities. Historically equities have given far better returns than any other asset class.
Look for schemes like Kotak Equity Opportunities Fund, Hdfc Midcap Opportuniites, Franklin India Equity Fund.
Example– Franklin India Equity Fund
Launch date- Sept 29, 1994
Return since Launch- whooping 18.5 percent per annum (Rs.10000 invested in the scheme has become 5,80,000 today.
Disclaimer: Please consult your financial consultant or an expert before making any investment. Also one very small and common tip is to never place all your eggs in one basket.
Hope this small little research of mine will help you plan and save for your little ones future.
Also if you liked what you read, please leave some love in the comment below and do not forget to follow me on Instagram @mamamusings_ for a daily dose of our parenting journey.