How To Plan for Child Education Expenses

A Child’s Education is the most important milestone in any parent’s life and every parent wants the best for their children. As parents, it is common to want the very best for your child – the best schooling, the best opportunities in life, etc. Education is one of the best benefits your children can receive. Even though education is the most important antecedence for parents, the costs are a major concern. They shell out a large portion of their savings to dispense the best education. Hence, a financial plan to achieve this goal is very essential.

To ensure your child receives the best education, you need to develop yourself financially. 

• Decide Your Time Horizon: Calculate the years to your child’s graduation and post-graduation. With the approximate number of years in mind, you can decide the time border. The longer the time prospect, the better it is for you to plan and invest. But do not wait till the last hour. Start investing for this goal the quickest.
• Estimate The Cost of Education: The first thing you need to do is actuate what is going to be the total cost of education for your child. This depends on various factors. One of the things to ask yourself is; do you want your child to have a global education, or do you prefer to have your child remain closer to home? This is to be considered alongside the second question – are there good schools in India/Abroad for the education your child is likely to choose? Third, do you want your child to do the undergraduate and postgraduate courses abroad, or just the postgraduate course? Finally, what is the likely overall cash effluvium in both cases? And while calculating the total expense, it is important to determine the future amount of high school or college, or the post-graduate course.
• Assess Your Existing Assets and Liabilities: List down all your assets and liabilities to know where you stand today to plan correspondingly. This can help you plan better. An important thing to bear in mind is that you must avoid dipping into the investments made for other financial goals, especially your retirement corpus, while planning for your child’s education. Also, you must also not lower the investments made for your child’s education for other low priority expenses such as renovating your home, etc.
• Know The Amount To Be Saved Now: Once you know the approximate cost of education. Decide how much you need to save now or a monthly addition required to achieve this goal on or before time. The easier way is to put aside some money for every goal in a systematic manner. You can either elect for the Systematic Investment Plan in Mutual Funds or start a Recurring Deposit with a Bank. The idea is to put apart some money regularly to meet this goal. Save and invest regularly so that you don’t have to take loans, which can prove to be a costly proposal in the long run.
• Plan Your Investments Smartly: The Smartest way of investing is by designing asset allocation and investing accordingly. Once you have made an account of the already existing investments which can be profiled toward your child’s education, you might need to save and invest on a regular basis to fill in the gap. You need to invest this hard-earned money in suitable finance avenues depending upon your asset allocation pattern and risk inclination to counter inflation and increase the value of your portfolio. Make sure your asset allocation is just right to carry out your child education goal.

Get Started Right Away: Last, but not the least, start now. The sure-fire way to not bring about your goal is procrastination. If you save and invest early, you will have a longer time perspective to meet your goals and build a bigger entirety enabled by the power of compounding.