“An investment in knowledge pays the best interest” – Benjamin Franklin.
This quote is enough to give all the parents an important lesson to plan for their children’s education. As a parent, you want the best things to happen in your child’s life. To some extent, it all depends on the quality of education your child receives.
Good quality education is one of the best gifts you can give to your child. However, it is not easy for all parents to pay for their children’s education. The cost of education, be it for school or higher education, has increased steeply in India. You need to shell out a considerable amount from your regular income to pay for educational costs. In case your earnings equal your expenses and you do not have much savings, being able to afford the best quality higher education for your child may seem like a distant dream. In this case, opting for a child education plan to deal with the required finances will help you out.
A financial plan is crucial to pay child education, the cost for which is inflating exponentially. Here are a few significant steps you must take to plan for your child’s education fund:
- Waste No Time in Putting Up a Plan in Place
First and foremost, consider child education a long-term financial goal. The right time to invest your time, efforts, and money in a child education plan is the birth of your child. The education world is changing, and children are not limited to pursue only engineering or management courses in India. There are numerous other courses as well, which may make it difficult for you to zero in at an option your child would possibly choose.
So, start as early as possible to plan for your child’s higher education fund. If you choose your child’s birth as the right time to put up a financial plan in place, you have around two decades to create enough wealth for your child’s higher education. Small but regular contributions to this plan will give good returns to support your child’s dreams for his future.
- Estimate the Cost of Higher Education
Once you have made your mind to opt for a financial plan for child education, the next important thing is to determine how much money you will need for this goal.
For this, you need to consider several factors, including a list of courses apt for your child, cost of choosing these courses, related miscellaneous expenses, choice of university among others.
Also, it would help if you ask yourself these important questions:
- Should you send your child abroad for higher education?
- Which are the universities your child would like to get enrolled in based on the discipline of their interest?
- What is the amount of money you should expect to spend?
While estimating the total expense of your child’s education, you must include the inflation rate too.
For instance, if an engineering college in India asks for a fee of INR 15 lakhs today and your child will join it ten years from now, the costs you will have to pay would be around INR 32 Lakhs, as per the inflation calculator.
Building a corpus of INR 32 lakhs usually takes time. So, you need to plan realistically based on the estimates of your child’s higher education plan.
- Invest Smartly
Investing your money smartly means creating separate investment plans for both short-term and long-term child education plans. You need to assign a specific amount to these plans and monitor them regularly.
For the long-term goal, investing through equity-oriented mutual funds is one of the best bets you can place. Over a long tenure, these funds deliver higher returns as compared to some other investment instruments. You can start with SIP with a mix of large-cap and mid-cap funds. While for short-term educational goals, you can choose SIP in balanced funds.
Once you have mapped your investments towards your child’s higher education, you need to continue investing regularly.
To sum up, leaving the future occurrences of your child’s life in the hands of destiny is not a good decision. By keeping in mind these crucial factors, you can easily accumulate the desired corpus by the time your child is ready for higher education.