Kids’ education is the top most priority for most Indian parents. According to an HSBC report, around 89% Indians fund their children’s education and 79% want their children to do post graduation.  Most parents do not even hesitate to ‘make sacrifices’ for their kids. Such is the parents’ desire to educate their children. But rising cost of education can make it difficult for parents to dedicate funds. Only with a well-focused approach, they can fulfill this goal. Read through to learn simple yet effective steps to plan for child’s education.
Step 1: Financial Planning Is The Key
Parents should focus on creating a holistic financial plan in which funding for education should be one of the major areas. Ideally, the overall financial plan should include all the priority money goals of life like retirement planning, plan for a house, vacation, buy a car, etc. A complete plan ensures to lead a complete life without compromising on other money goals. For example, your kid’s higher education needs should not deplete your retirement corpus that is otherwise being built to lead a dignified retired life. Below are the simple steps that help build a thorough financial plan.
- Identify all your money goals of life and make a complete list.
- Prioritize those goals based on the importance and necessity. For example, you may choose to prioritize your house dream over foreign vacation. Prioritization varies from one individual to another. It gives anyone a clear direction to proceed.
- Segregate all the financial goals based on the timeline within which they are to be achieved. For example, if you are a 30-year-old with a 5-year kid, you have 30 years in hand to reach your retirement goal and 10 years for planning for your kid’s college education.
- Plan out to reach each goal separately to make sure that money requirement for one goal does not disturb the preparation for another goal.Â
- Distribute savings based on the timeline and targeted corpus for every goal. Â
- Seek expert assistance in the entire process and plan to achieve all the money goals successfully.
Step 2: Automate Savings
Child education is a big financial commitment. After planning, automate savings to build the required corpus within the stipulated time. Save as much as possible. Plan to meet your expenses within the left out amount after savings. Avoid non-committed expenses like lavish dinners, luxury travel, etc. Value your hard-earned income and divert them to the right channels. In simple, let your savings grow.
Step 3: Start Early Investments
Simple savings can neither help you beat inflation nor meet money goals within the target time. Especially, with the increasing cost of education year on year, parents are expected to plan thoroughly to avoid financial constraints. Right planning with the early investments helps families meet the desired expenses without feeling the financial burden.
In conclusion, planning for the child’s education needs should be a part of the overall financial planning. Focussing just on educational needs and neglecting other money goals may defeat the entire purpose. Equal prominence has to be given to all the financial goals to lead a self-sufficient and undisturbed life. Seek expert advice from online financial advisors like ArthaYantra to get a holistic planning done and secure your financial future!
