Being a parent is perhaps the best thing to happen to you. But, raising a child and attending to their educational needs require a lot of financial planning.
In this article, let us look at how to go about planning for your child’s higher education.
Set a goal:
Goal-based financial planning can help you know:
- How big your monetary corpus should be?
- By when you will need this corpus?
- How much of your monthly income should you keep aside?
While you are at it, you can also research the current cost of various academical streams in both – India and abroad. Furthermore, keeping inflation in mind, calculate the amount which you will require when your child enrols for higher education. Seeking professional advice can help immensely while setting your financial goal. Since financial experts constantly monitor the market trends, they are in a better position to assist you in calculating your finances for the future.
Opt for wealth creation instruments:
There are several wealth-creation instruments available in the market today. Each of which helps you reach a certain financial goal. Many financial instruments also provide you with high returns. Some instruments are designed for long-term goals while others can support your finance short-term goals, depending on what you may have planned for your child. Furthermore, a lot of these financial instruments offer tax benefits.
Opt for child education plan:
These are essentially insurance cum investment plans. They are designed to protect your child financially, in case of your (the earning parent) premature death. It also offers to provide the required finances for your child’s higher education. Many child education plans also allow you withdrawal options during the tenure of the plan. You can use this money to support and nurture your child’s special talents, such as acting or music.
Start planning early:
The key to creating a substantial financial corpus for your child’s higher education is to start early. Often, people wait for the time when they can invest more, which is not advisable. While you may need to start your investment with an ‘X’ amount, and you have only half of it, the wise thing to do is begin with what you have.
When it comes to your child’s future, it is important to stay committed to all the financial decisions you take. Avoid withdrawing from the child plan or terminating it. Even if you find lucrative options, discontinuing the current plan is not advisable.