Raising a child is no mean feat, especially in today’s times. Children are growing up to be more ambitious than ever before, and with their aspirations comes the accompanying burden of meeting their needs. However, a good education can take care of a significant part of these needs and there are various ways in which an average parent can fulfil this goal for his or her child.
While a large number of families give importance to education and send their children to school from an early age, only a few plan for the cost that college or university education demands at present. With the rising cost of education not just in India, but across the world, planning for your child’s higher education is important.
According to recent estimates by industry body ASSOCHAM, India will have the world’s largest tertiary-age population by the end of 2022, but inadequate funding for higher education means many students will have only limited opportunity to study in top institutions.
A separate investment portfolio will ensure that parents can clearly plan for and track the investments required to meet their goal. It will also help mitigate risk.
Listed below are 5 tips for parents to keep in mind if you wish to save money for your child’s higher education.
- Start Planning and Saving Early.
You can start saving money for your child’s future education as early as when he /she is born. This will give you a substantial amount of time to save without stressing yourself too much. It is recommended to start by saving a lump sum amount as your regular investment value will depend on it. For example, if you start with a lump sum of Rs. 10 lakh, you would need to invest around 43,000 INR monthly to save 80 lakhs in 8 years. However, if you start earlier than that, your monthly savings goal can be much more flexible. - Set Goals Keeping Education Inflation In Mind.
Education Inflation is a real thing and no, you don’t have to be a pro to understand it. Education Inflation is also known as Academic Inflation and is associated by rising education prices by the year, especially higher education. In the past 3 years, India alone has seen a rise of 10% in higher education fees and that’s exactly why you must calculate your monthly savings keeping a minimum yearly rise of 4% in mind to meet your goals. - Have Separate Investment Portfolios For Each Of Your Goals.
Your child’s higher education is not the only aspect of the future you’re worried about, is it? People save for other things too like Retirement, marrying their children, and more. For retirement, you can choose to park your money in the form of mutual funds, FDs, etc and it’s always best to keep these savings separate from the ones for your child's education. - Reduce Debts.
The more debts you take on, the less you save in the long run. Before opening up a Higher Education Fund for your children, try to pay off all your debts so that they don’t come back to bite you in the future. Remember, debts always have interest rates that add up to a lot and make you spend more in repaying them. So, if Higher Education for your children is on the charts, try to reduce your debt ratio. - Insure Yourself To Protect Your Children.
Life as you may know it, is uncertain. So, it is important to always plan ahead and insure yourself so that your family doesn’t get affected by uncertainties. Apart from self-insurances, child insurances are also available that can work in your favour, but it is always important to read through the finer lines before investing in them.
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Disclaimer: Views expressed in this article expresses our views, thoughts and opinions for your consideration purposes only. Kindly refer to an authorized finance advisor for professional advisory services or investment options and solutions.