This Is What You Should Be Doing With All The Money Your Kids Got For Diwali

This Diwali, my kids were in for a little treat. We visited a number of friends and relatives and exchanged good wishes, but my kids were pleasantly surprised that almost every person they met and wished, gave them some amount of money. Now we aren’t talking 10s and 20s but more in the range of 500s and 1000s! By the end of the three-day festival, my kids had not only developed a sudden interest in visiting relatives but had also racked up a considerable amount of money! Of course, you could blow it all up on a single trip to Hamleys, but do you really want more toys at home? You could also blow it up on yet another i-something, but it doesn’t seem right does it?

If you are looking at a smarter solution, then you are definitely thinking of working towards a plan to financially secure your child’s future – and this ‘gift’ money your child gets every year can help you do just that!

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Here are 5 things you could with ‘gift’ money for your child’s financial future:

1. Open a bank account – If you are a new parent and this is your child’s first Diwali, here is the first step to start a strong financial future for your child. Rather than saving your child’s Diwali money in your locker, go to your bank and open an account. Continue to deposit all the money received on different festivals to this account and you will be surprised at how quickly it grows.
2. Invest in building your child’s interests –  If there is some expense that can help in furthering your child’s career goals, be it art, sports, or academics go ahead and use your child’s Diwali money (and add a small sum from your own bonus) to meet that expense.
3. Invest in government schemes like Sukanya Samriddhi – The government has some excellent schemes you can invest in if you have a daughter. Through the Sukanya Samriddhi scheme, you can deposit funds solely to meet the education and marriage expense of the girl child. The scheme has a 21 years tenure or the date of your daughter’s marriage whichever is earlier. However, parents can withdraw 50% off the deposit amount once their daughter reaches 10 years or passes 10th grade.
4. Invest in a PPF account– This one is a popular investment option amongst parents as usage of the funds accumulated in the  children’s PPF account does not just end with completion of their education or marriage, in fact your kids can continue to use the same account for their retirement planning! Parents can either withdraw the entire amount after 15 years or extend the account in blocks of 5 years any number of times. So if your kids are really young, open a PPF account for them this year, so they can enjoy lesser restrictions in withdrawal and shorter lock-in periods with their investments.
5. Invest in NSC (National Saving Certificate)– Having a minimum investment requirement of as low as Rs.100 , NSC is an excellent small saving scheme for parents looking for investment options that has a shorter lock- in period of 5 or 10 years. So if you invest in NSC when your child is  5 years and you choose the 10 year plan,by the time your child turns 15, you could have saved enough to pay for his/her higher education.
6. Consider investing in mutual funds via SIPs, investing in recurring deposits, taking an additional term insurance plan - all of these are financial instruments that help you create wealth and secure your child’s future.

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