How to plan for your child’s future education expenses?
As a parent, the birth of a child is undoubtedly one of the most important events in one’s life. There is nothing you wouldn’t do to shower your baby with love and affection and protect and care for your little one. The moment a child is born into this world, the one relation that probably is long-lasting and holds the most importance is the bond that parents share with their children.
When you’ve have this child with so much potential and with their entire lives in front of them, the last thing you want to hear is that you may not be able to afford their education! A lot has changed in the past few decades. Be it the lifestyles' that we lead to the bludgeoning inflation rate, the cost of living and most importantly, the competition in every sphere of our lives; everything seems to have gone up several notches. Invariably, there is a question that seems to haunt each and every parent these days; whether they will be able to meet their child’s higher education expenses in the long run and, in turn, be able to fulfill their child's dreams.
Financial Planning: Why It Makes Sense!
With the spiraling costs of schooling, funding your child’s education is a hot topic today. Several parents find coping with mortgage repayments, bills and living expenses challenging enough without suddenly finding thousands extra for education fees. However, with the help of some careful forward planning, you can ensure you have enough saved up for yourselves while also making sure that you can give your child, the full array of options for education. Luckily for parents, you can increase your financial readiness and reach your goals for putting money aside for your child’s education by making some smart choices now. By following a methodical strategy and planning your investments in education plans systematically at an early stage, you will be able to secure your child’s future. Here are the different life stages where financial planning is done.
Below 5 years
Your child is relatively young at this stage in their lives. This means, realistically, the maximum amount of expenses you will be incurring would be on their food, clothing, health and day-care costs. This basically entails that you have the leeway to start investing as early as possible keeping your priorities and financial goals in mind. By making sound investments in the best child plans, you will be able to reap the benefits of capital appreciation which, in turn, will enable you to accumulate a significant corpus over a period of time
Between 5 and 15 years
This is the stage wherein you will need to figure out how to deal with your child’s school admission, tutoring, healthcare, day-care, and other related expenses. You may not know exactly what your child may end up pursuing 10 years down the line. However, you may know whether you would prefer to send her to a local college or a college abroad. You would also know whether you want your child to pursue post-graduation or not. At this stage, having a well thought out investment plan for your child’s future needs will help you avoid any potential financial headaches in the future. Further, a lot of insurance plans and child plans offer periodic payout options which can enable you to meet short-term expenses.
Above 15 years
At this stage, you need to prepare to set up your child for higher education starting from college all the way up to their post-graduation. If you had started saving early, this is the stage where the multiplier effect in the power of compounding comes into play; the longer the time horizon, the higher the multiplier effect. If you had created a portfolio that combines the best child plans, unit-linked insurance plans, and education plans, you would have generated enough returns to beat inflation.
Also Read: What are Unit Linked Insurance Plans(ULIP)?
The Bottom Line
The more you delay in investing, the higher you will end up having to invest every month later on. Additionally, it will also reduce your ability to take risks. Your children are your world so plan wisely. By doing diligent research on the best child plans, you can ensure a comfortable and secure future for your children. A good plan today is better than a perfect plan tomorrow. So do not delay and start preparing a fool-proof plan today.
AN Jan 52/18