The primary focus of a parent is securing the future of their children. The rising costs of education have created a stressful atmosphere. In this regard, a child education plan is the only way to create a good corpus for your child & beat inflation at the same time!
Start saving money for your child's education before he turns 18 years old.
You should begin planning your education as soon as you decide to have a family.
Don't wait until the last minute. Think of it as the amount of wealth you will be able to accumulate during the 18th year of your child's life. You will have 15-16 years to accumulate wealth for your child's education if you invest early when your child is 2-3 years old.
➢ Prepare a monthly liabilities plan
Having a monthly budget helps majorly in understanding your expenses. Many times you might find yourself in a situation where you end up paying more than your desired expenses. When it comes to saving funds for your child’s education you have to move an extra step.
With inflation being at its peak,
education costs have skyrocketed. This will in the future will be doubled or
even tripled. Having a budget helps you to segregate your expenses into the
following categories:
-
Necessary expenses
-
Lifestyle expenses
-
Investment
- Savings
You should prepare a budget for monthly liabilities before investing in any financial product. Traditional courses are being replaced by many new ones. As courses become more varied, they are also becoming more expensive. You can calculate the estimated costs for a few basic courses today.
By considering inflation, you can determine the desired cost for the future. Choose the tenure during which your child will require the money. Estimate the amount you will need to set aside each month for this goal after estimating the requirement.
➢ The earlier you begin, the greater the benefits
Planning for your child's higher education
when he or she is 1-2 years old will do wonders for your investment. Imagine
you are 30 years old and a software developer with a baby boy. Your child's
higher education is being funded with the 15,000 you have invested.
You had in mind engineering and MBA, but these may change in the future, so
it's a good idea to start planning by keeping a course in mind. It costs around
seven lakhs to attend a reputed engineering college today. A degree of the same
price by the age of 18 might cost 90 lakhs-1 crores, depending on the inflation
rate.
How will you arrange this amount on short notice? Investing early saves you in this situation. Moreover, compounding plays a crucial role in long-term investments.
➢ The best investment options for your child
●
MUTUAL
FUNDS
Mutual fund investment becomes the
deciding factor for long-term financial investments like this diversified
equity. There is a risk associated with equity investments, but there are also
high returns. A mix of large-cap and mid-cap funds can also be invested in an
early SIP. Diversify your investments to minimize risk. In order to gain the benefits of compounding,
one should go for a long tenure.
● Your child's ULIP plan
You can reap many benefits as a parent by investing in a child's ULIP plan. The
child is ensured that the required amount is received at the desired age
through a premium waiver feature. If something were to happen to you, your
child would still be supported financially if you had adequate life insurance.
No matter what happens to you, your child's needs will not be neglected.
● Protect your child's future with a PPF
Your child may also benefit from opening a PPF account under
his name. Your child will benefit from a tax-free corpus created through a PPF
account for 15 straight years. If your child requires financial assistance
after the 6th or 7th year, a partial withdrawal is possible. You can extend the
PPF account to your child when they become an adult.
Especially when it comes to finances, planning is the golden rule. As inflation
rises yearly, so does the cost of minor to major items. Currently, the cost of
education is quite high; imagine what it will be like in 10-20 years. Getting
prepared for such costs requires planning!
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