Best Financial Gifts You Could Consider for Children’s Day

In a time where education, healthcare, and lifestyle expenses continue to soar, investing strategically to build a financial safety net for our children has become essential. In light of rising costs and shifting educational needs, planning for a child's future now demands a strategic financial approach. For parents, securing a stable financial future goes beyond saving-it requires investing in avenues that can generate significant returns over time.

This Children's Day, let's commit to empowering our children not just with love and care but with the financial literacy and security they need to thrive in an ever changing world.

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[Read: How Prudent Financial Planning Can Brighten Your Child's Future]

Inflation, especially in sectors like education and healthcare, means that relying solely on traditional savings accounts may not suffice. Instead, parents are turning towards systematic investment plans (SIPs), mutual funds, children-specific insurance policies, and other investment options designed to meet long-term goals.

Every year, Children's Day offers us a moment to reflect on how we can shape a promising future for the young ones in our lives. While toys, gadgets, and clothes often dominate the gifting landscape, there is one category of gifts that can have a profound, lasting impact: financial gifts. Giving financial gifts on Children's Day is a thoughtful way to secure your child's future, instil long-term planning, and start building wealth on their behalf.

Here's a look at five of the best financial gifts you could consider for Children's Day:

1. Opening a Minor's Savings Account

A savings account specifically designed for minors is one of the simplest and most effective ways to introduce children to the concept of savings. Many banks offer these accounts, which parents can open on behalf of their children, often with attractive features like higher interest rates and low maintenance fees.

A savings account allows children to learn about managing their money, understanding interest, and setting goals. Since these accounts are often secure with withdrawal limits, they provide a safe place for children's money to grow. Many banks offer access to digital banking facilities for these accounts, which helps children become comfortable with digital transactions.

[Read: Here's Why You Should Open a Savings Account for Your Child]

You can make the initial deposit in the account as a Children's Day gift and encourage them to add to it over time. As they see their balance grow, they'll gain a sense of accomplishment and learn about the value of saving.

2. Systematic Investment Plan (SIP) in Mutual Funds

Mutual Funds have gained popularity as an investment choice because they offer the potential for high returns over the long term. A Systematic Investment Plan (SIP) in mutual funds can be an excellent way to begin investing for children. SIPs allow for disciplined investing, where a fixed amount is invested periodically, making it easy to build a significant corpus over the years.

By starting early, children can benefit from the power of compounding. Even small investments can grow substantially over time. SIPs can be initiated with modest amounts, allowing parents to adjust the contribution as needed. Investing in equity-oriented mutual funds through SIPs can generate higher returns than traditional saving methods over an extended period.

In essence, SIPs not only foster a habit of regular saving but also position children for a financially secure future.

Choose a diversified mutual fund scheme and set up an SIP on behalf of the child. Every year, you can show them how the investment has grown and explain the impact of compounding, which can be a great financial lesson.

3. Sukanya Samriddhi Yojana (SSY)

For those with daughters, the Sukanya Samriddhi Yojana (SSY) is a government-backed savings scheme specifically designed to secure the financial future of girls. The scheme offers an attractive interest rate, tax benefits, and is designed for long-term savings for higher education and marriage expenses.

SSY is one of the few schemes offering tax-free returns under Section 80C of the Income Tax Act. Being a government-backed scheme, it provides security and guarantees for the investment. Compared to traditional savings accounts, SSY offers a higher interest rate, which means better returns over time.

As a Children's Day gift, you can open an SSY account in the child's name with an initial deposit. You can explain the purpose of the fund to them as they grow up, emphasizing the importance of securing a strong future.

4. Health Insurance Cover

Apart from securing funds for education, parents in 2024 are increasingly focused on the health aspect of financial planning. With health-related costs rising, having a dedicated health fund for children is becoming common. Insurance plans specifically designed for children's health can cover critical illnesses and other medical needs, ensuring that financial constraints do not hinder a child's well-being.

Many parents also opt for family floater plans that include children, offering a safety net in case of unexpected medical expenses. Most health insurance plans cover almost all major illnesses, injuries, and annual health check-ups, which can be handy during every stage of a child's growth. After your child turns a major, he/she can buy separate health insurance coverage independently.

5. Financial Books and Board Games

This Children's Day, consider gifting financial education as a unique, meaningful choice, equipping them with tools to navigate their financial futures confidently.

Introducing children to finance can start simply with illustrated books on money management, savings, and investing. These books are designed to be engaging and age-appropriate, with examples tailored to each age group from kindergarten through high school. Such resources offer foundational money lessons to help kids build lifelong financial skills.

Another fun way to teach financial literacy is through classic board games like Monopoly, The Game of Life, Cashflow, and Payday. These games provide hands-on experiences with budgeting, saving, investing, and managing expenses, all in a playful setting. While children enjoy these games, the valuable lessons about money they learn will stay with them as they grow.

Why Financial Gifts Make a Difference

Giving financial gifts on Children's Day is not just about securing a child's financial future but also about instilling values that last a lifetime. Each of the five options mentioned here promotes long-term financial habits that can benefit children in multiple ways.

As they grow, they will come to appreciate these gifts even more, recognizing the forethought and care that went into choosing a different, more meaningful path than conventional gifts. They will also enter adulthood with financial assets, knowledge, and a sense of responsibility that empowers them to make well-informed decisions for their future.

By gifting financial assets like a savings account, mutual fund SIP, Sukanya Samriddhi Yojana (SSY), or gold or by equipping them with financial knowledge, you are giving them a head start toward financial independence-one of the most valuable life skills anyone can have.

This Children's Day, consider these meaningful financial gift options that will continue to grow with them and support their dreams for years to come.

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Hiral Bhuta is a Investment Consultant & Principal Officer. She is a seasoned professional in the financial services industry, currently serving as an Investment Advisor and Financial Planner at PersonalFN. With her expertise, she plays a pivotal role as the Principal Officer appointed under SEBI's amended IA Regulation. Hiral holds distinguished certifications such as Certified Financial Planner (CFP) and NISM XA & XB, complemented by a post-graduate degree in commerce (M. Com). Her primary areas of focus encompass financial planning, investment advisory, and wealth management, where she leverages her knowledge and skills to provide tailored solutions to clients. With a cumulative experience spanning five years, Hiral brings a wealth of expertise and insight to her role at PersonalFN, ensuring clients receive expert guidance and support in navigating their financial goals.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.