As parents, we want the best of everything for our children. We want them to eat nutritious food, get valuable life experiences, and get the best possible education. In India, a good education is a guarantee for a better life. However, with rising inflation, the cost of a good education has begun to spiral. Middle-class parents often struggle with finances, availing of expensive education loans, and making sacrifices to afford higher education for their children.
But it doesn’t have to be that way. Parents who begin saving early; succeed in building the corpus they need to fund their child’s education when the time comes. The money earns enough interest to grow steadily into a large sum that is enough – even if your child chooses to go to a private educational institution for higher studies.
Here are some essential tips for new parents who want to begin saving for their child’s education –
- Calculate Your Time Horizon – Time is crucial in savings and investments. Determine how much time you have before your child turns eighteen and needs to begin higher studies. Based on your time, you can decide how much you need to save each month and for how long. For example, if your child is three years old, you have fifteen years to save for their education.
- Research the Cost of Education –Research online and talk to other parents with older kids about the cost of different educational avenues. Think about the cost of educating your child where you live versus sending them abroad for higher education. Compare the costs of studying at a government or private institution and the different courses your child may choose from. It will help you understand the final amount you need to set as a savings goal.
- Plan Your Investments Intelligently –Allocate your assets smartly and plan your investments after considering all your financial goals. Take care not to dip into your retirement savings or other investments when planning for your child’s education. The opposite is true – do not dip into your child’s education fund for short-term expenses such as a home renovation or purchasing a vehicle.
- Budget Your Savings Wisely –Invest your savings where you can get the maximum interest. Look for a digital investment avenue with lucrative returns such as a digital savings account that gives you higher interest on your savings compared to traditional bank accounts. It is convenient and makes it easy to save money for a child’s education. It is also easy to access your funds whenever needed.
- Review Your Portfolio Regularly –Whenever investing for the long term, you should review your portfolio from time to time. Once a year, check if your financial goal is current, even with rising inflation. It will help determine if you need to increase or reduce the amount you save for your child’s future. Also, review the options for investment available; you may find some new avenues that offer better interest rates.
- Life Insurance –Your dream of giving your child the best education will live on even if you or your spouse suffer an untimely death. Ensure that you have good health and life insurance to cover the cost of your child’s education in the event of your untimely demise.
A child’s education is considered an essential duty of parents. Getting started early to save for your child’s education can secure your child’s future. Plan for your financial health and family expenses to make the most of your earnings. Research well to create a good portfolio mix and plan smartly for your investments. Finding the best money savings plans and investing for your child’s future may be the best decisions you make in your parenting life.