Wealth management for new parents: Expert explains 5 money moves to secure your child's future

When you welcome a child into your family, it is a unique, life-changing experience. It is an experience that brings immense joy, meaning, and essence in an individual's life. Not only that, but a new child brings several new responsibilities for the family where he or she is born.

Furthermore, it is a given that parents do their best to ensure their children excel in life. This calls for building a clear, objective and solid economic foundation for the child as indispensable to securing their future. As young parents, it is prudent to focus on planning for the child’s higher education, travel, health, long-term financial objectives, and short-term targets so that the child can make the most of their life. For a parent to accomplish these tasks successfully, financial preparedness and clarity of mind are key.

Yudhajit Baul, Founder of Yudhajit Financial Services Pvt Ltd, explained this, stating, "New parents engrossed in providing care for their child often overlook the financial preparedness for their additional responsibility. Therefore, new parents must secure their child’s future by first investing in an adequate term insurance plan, followed by a suitable health insurance plan.”

He further added, “Additionally, parents must maintain a sufficient liquid surplus for their family's health emergencies. Parents also need to start investing in their child’s higher education through equity mutual funds via SIPs for the long term. We recommend parents to invest in equity mutual funds through SIP exclusively from the minor child’s bank account in order to stay committed to their goal of creating that desirable corpus.”

Along with these essentials, parents should also prioritise building an emergency fund that covers at least six months of household expenses. This financial cushion can help families navigate unexpected medical costs, job loss, or other emergencies without disrupting long-term investment goals. Reviewing financial plans regularly and increasing investments as income grows can further strengthen future financial security.

Highlighting the importance of starting investments early, Baul further explained, “As the inflation rate of higher education is around 8%, parents should start investing from their minor child’s account at the earliest. Today’s higher education costs, for example, around 30 lakhs, will be inflated to 1.2 crores in 18 years at an inflation of 8%."He further stated, "This way, an investment of 15765 per month for 18 years in equity mutual funds may help them to build a corpus of around 1.2 crores at a CAGR of 12.62%, if they delay starting the SIP by 12 months or a year, then they may end up having a shortfall of around 15 lakhs in 18 years. So it is imperative that parents recognise the urgency and start investing towards their child’s higher education, and also take adequate life insurance term plan and sufficient health cover.”

Therefore, the simple yet effective key money moves outlined above for new parents, if implemented in a planned manner, are bound to bring meaningful changes to the lives of individuals who have just started a new family. Basic ideas such as having term life insurance, health insurance, an emergency fund, and an investment plan for long-term wealth creation are powerful ways to provide children with a solid financial foundation for accomplishing their long-term life objectives.

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