A 3-Point Financial Planing Path for Education
As a parent, giving your child nothing but the best in terms of education is a definite priority. There is so much competition in the world today, and why wouldn’t you want to secure the best future for your children in such a cutthroat environment? This not only becomes a parenting goal but also turns into a financial problem, since quality education is getting costlier by the hour. Gone are the days when central universities would provide quality subsidized education. With the increase in private universities, the price that one must pay to obtain education has shot up considerably.
So here are some of the things you must take care of as you set about financially providing for your child:
1. Prepare a Map
We conducted a survey called “'Aviva Plan India Plan survey 2017”. The key takeaway of the survey was that Indian parents do not plan ahead, as a result of which they do not end up securing the financial capital required for their children to achieve their dreams. There were two indices, “Dream Index” and “Plan Index”. The first indicated the degree of awareness that parents had about their life goals, while the latter indicated how well they were financially prepared to meet these goals. The Dream Index stood at 61 for most, while the Plan Index fared a poor 24 only! Therefore, the first step is to make a map of all the important checkpoints in one’s life and the amount of money required to be able to fulfill them.
2. Factor in Inflation
When it comes to being careful about how to understand the possible future and plan for it, a lot of people do not factor in inflation. This is a big mistake that’s bound to cost in the longer run since an amount which might seem perfectly reasonable today might be woefully inadequate in ten years’ time. If you factor in inflation, you may be able to avoid scenarios in which you have to unwisely use your retirement or opt for super-expensive education loans. If you think long enough, compounding will do its magic - and you will get exactly where you want to be financially!
3. Invest Wisely
There are a plethora of great investment options in the market that have good potential for wealth creation in the long term. Make sure you know what your financial goals are before you dive into investing. If you have half a decade (or more) - as ideally you should - then you could definitely consider investing in market related products, as you stand to benefit greatly in the long run. If you have a relatively shorter time frame, it is definitely a good idea to invest in safer and fixed return options. We would suggest that you take a look at all your options, do your research and then think about what kind of investment option suits your requirements and goals. It’s never too late to invest!
In conclusion, you need to plan ahead for the education of your child - and making the right investments is only one of the financial decisions you need to make to be completely secure when the right time arrives. You can also take a look at some of Aviva’s Child Plans. While not essential, these will most definitely provide enough cover to ensure that your child gets the education they deserve, no matter what happens to anybody else.
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