Planning for financial needs of kids is the responsibility of every parent. Sometimes, you may have excess money and would like to do more for them. Some ideas are investing in a superior post graduation course, funding for their education from your own funds rather than go for an education loan, investing in building their skills or in setting up a business for them, planning your estate and setting up a charity trust.
Nevertheless, despite arranging for all these important goals, there is always a question as to what more can be done for kids. When there is surplus money, your first thought will always be on what is that extra bit you can do for your kids. Here are some ideas for you:
Invest in a superior post graduation course: You would have definitely planned for your child’s post graduation. But if you have more money, why not invest for a superior course in a better university? You can also plan on saving for a costlier course which can interest your kid in the future.
Higher proportion of own funds: These days, education has become an extremely costly affair, both in India and abroad. As a result, more and more families are opting for an education loan, which not only eases the burden of funding, but can also get you Income tax benefits. Nevertheless, a loan is a loan and will result in an outflow from your pocket or your child’s salary. If you have surplus funds, what better way to help out your kid, than contributing 100% to his education and avoiding a loan? Even if giving 100% funding is not possible, you can atleast increase the proportion of own funds, thereby reducing the loan component, and easing cash outflows from your kid’s pocket.
Invest in a business for your kid: You can invest in a business which makes the ground ready for your child. You may wonder why you should provide a ready meal to him and that he should learn on his own. We agree that it is not always advisable to hand everything to your child on a silver platter. Nevertheless, providing an environment to him with the right guidance, especially when you have surplus funds, is not wrong. Rather, it may help him build a successful business, as some kids need only an initial push to achieve great things in life.
Make an estate plan: Estate planning is very important for everyone, but most people tend to ignore this. If you are rich, with a lot of money, it becomes imperative you have an estate plan in place, to protect your spouse and children. If your children have not yet attained majority, name an adult in your estate plan who can manage money and property of your minor children. If you solely run a business or a part of a business jointly with others, your estate plan should either have a succession plan in place or talk of a buyout agreement with others.
Set up a trust: Inculcating the right values in kids is very important. If you have a lot of money, you can set up a charity trust or an NGO. In your estate plan, you can stipulate that the estate will be available to kids if they fulfil their responsibility of carrying forward initiatives of NGOs or donate a certain amount towards charity. Although this step will not directly benefit your children financially, it will teach them the right values in life.