The arrival of a newborn brings a whirlwind of emotions and responsibilities, and amidst the joy, financial planning often takes a back seat. However, as chartered accountant Shivani Jha (@cashivanijha) recently highlighted, the early months after a baby's birth are an ideal time to lay the groundwork for their financial future. While it may seem like a daunting task, these initial steps can significantly simplify the process of accessing government schemes, investing for the child's future, and avoiding unnecessary paperwork later on.
Here's a breakdown of the four financial moves every new parent should consider making immediately, according to Jha:
1. Secure a Baal Aadhaar
One of the first documents parents should apply for is a Baal Aadhaar, which is issued to children under the age of five. This seemingly administrative task can have a significant impact on their future.
"Baal Aadhaar is a crucial document that can be useful for various purposes, including school admissions, passport applications, opening bank accounts, accessing government welfare schemes, and even investment accounts," Jha explains. "The application process is straightforward and can be initiated through the UIDAI website."
The benefits of securing a Baal Aadhaar early are clear. It streamlines future processes and ensures that your child has the necessary identification and documentation from the start.
2. Apply for a Minor PAN Card
Many parents assume that a PAN card is only necessary once a child starts earning. However, Jha emphasizes the value of applying for a Minor PAN early on.
"A PAN card can be beneficial for various financial activities, such as mutual fund investments, opening a demat account, and establishing a financial identity that continues into adulthood," she notes. "Applying for a Minor PAN early on can simplify these processes and provide a head start in financial matters."
The Minor PAN card application process is accessible through the pan.utiitsl.com website, making it convenient for parents to secure this essential document.
3. Open a Government Savings Account
Jha recommends opening a long-term government savings account for children, specifically highlighting two schemes:
Sukanya Samriddhi Yojana (SSY)
Designed exclusively for girls, SSY is a government-backed small savings scheme with several advantages. It is available only to girls, offering higher interest rates and providing a dedicated financial avenue for their future.
Public Provident Fund (PPF)
Both boys and girls can benefit from PPF accounts, which are government-backed and offer long-term savings with a 15-year tenure that can be extended. PPF accounts are accessible through participating banks and post offices across India, making it convenient for parents to open these accounts for their children.
4. Open a Minor Bank Account
Many banks offer specialized children's savings accounts, providing parental control until the child reaches the eligible age. These accounts enable parents to make savings in their child's name, link investments, and build a financial history.
Jha suggests starting with even a small amount, like 500 rupees per month, through an SIP (Systematic Investment Plan) to build long-term wealth. Equity SIPs, in particular, are recommended for their potential to generate significant returns over time.
In conclusion, Jha emphasizes that early financial planning is a meaningful gift parents can give their children. It not only supports their future milestones, such as education and financial independence, but also provides a solid foundation for their overall well-being and security.
