“Education is the key to unlocking dreams”
Every parent dreams of providing the best of everything to their children, but in today’s era of relentless inflation, education costs are also rising. Therefore, smartly planning your child’s education is important. Here are some ways you can achieve that goal.
- Starting early is important
The ideal time to start planning for your child’s education is right after he/she is born. For example, assuming that your child will attend college at the age of 18 or 19, you will have almost two decades to prepare for his/her higher education. Starting saving and investments early will eliminate the worry of gathering a large amount at the last moment. Moreover, a longer time window also means that your investments would get enough time to grow for higher returns.
- Discipline your spending
It is crucial to understand that saving money is the ground of financial planning. Your long-term goal is majorly driven by your ability to save money even during uncertain times. For this, adopting a strictly disciplined approach to saving a particular amount every month is certainly necessary. There are various budget planning tools available online which you can use to make it a practice.
- Focus on high return investments
Another important factor to consider while planning your children’s education is inflation. According to the National Sample Survey Office (NSSO), between 2008 and 2014, the cost of education from primary to post-graduate level has significantly risen by 175 per cent. Similarly, for professional and technical education, the cost has shot up by 96 per cent. Keeping this in mind, it is highly recommended to invest in high-return instruments that provide protection against inflation. Also, in case of a long-term investment like this, you should focus on moderate risk investments as periodic market fluctuations would not affect your goal.
- Get a life insurance cover
As critical as it is to invest, it is also important that you have a life cover in place for yourself.This life insurance will keep your family financially protected and aid in your child’s future goals, even in your absence.
- Diversify portfolio
For better management of your funds, it is advisable to invest in different financial avenues to balance risks and get higher returns. Ideally, for your child’s education, your portfolio should mainly consist of equity-oriented instruments such as mutual funds, child Ulips, and Public Provident Fund (PPF). And as you reach closer to your goal, recalibrate your investment portfolio gradually towards fixed income or debt.
Lastly, It is important to note that even if you are unable to invest for a while, do not redeem your investment to finance any other need than what it was created for.