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How to Save for Your Child’s Higher Education

Upbringing a child is a tough job.  There are too many things the parents need to ensure and manage in order to provide the best to their children and secure their life financially. It is important to do smart financial planning to ensure that your child’s future education fees and other requirements are taken care of even in your absence. The best way a parent can secure the financial future of their child is by purchasing a child education plan.

If we talk about the financial security of children then having good savings has become important then ever before.  Nowadays, with the skyrocketing cost of education fees and growing inflation, it is a must to invest in the best child education plan. Thus, to avoid any type of financial burden on your children make sure that you start right from the time when your child is born. Read further to know simple tips on how to save for your child’s higher education.

Assess the Future Needs of Your Child

Before creating any financial plan or before making any investment make sure that you make a proper evaluation of the needs of your children. Once you evaluate the needs of the child, plan accordingly to save for it.  Try to achieve the different financial objectives that your child will require with the growing age. With a proper evaluation of how much funds you will need until your child grows up will help you to create a strong financial cushion for your child.

Be an Early Bird

For example, Mr. Gupta has a son who is 3 years old. He will do his graduation after 15 years. The cost of graduation in today’s term is Rs.5 lakh. By taking the rate of inflation of 10% per annum, after 15 years Mr. Gupta will have pay Rs. 20.88 lakh for his son's graduation.  If Mr. Gupat starts investing now then he will have to invest Rs. 4,180 per month whereas if he plans to invest after 5 years then this amount will increase and he will have to invest Rs. 9,079 per month i.e. almost double the amount. Thus by investing earlier, you will be able to create a strong financial backup for your child at the correct time.

Savings Alone is not Sufficient

If you want to gain high returns then saving in your savings bank account is not sufficient. You should consider investing in the different investment options available in the market and choose the investment option based on factors like time period, risk appetite, future objectives, etc. to make your portfolio work towards the financial goal that you have set.

To secure the financial future of the child you can choose to invest in the child education plan available in the market. Moreover, you can invest in the child insurance plans offered by different insurance companies as per your requirement and suitability. With the help of a child insurance plan, you will be able to achieve the financial goal that you have set for your child. However, before making any investment it is important to understand these products precisely and evaluate the viability and characteristics of these products.

Save for Long Term

When it comes to securing the financial future of the child, it is always advised to save for the long term. If you start saving right from the time when your child in small then you can create a financial cushion for your child in the long-term. Moreover, you can create a sustainable financial backup for your child so that he can achieve the major objectives of life.

Take into Consideration the Factor of Inflation

One of the most important factors that should be considered while doing financial planning for your child is inflation. Before zeroing in on a particular plan or while saving make you factor the rate of inflation. By keeping in mind the growing inflation rate, you should compute the amount you will need in the future for the upbringing of your children. Based on your estimation, try to save for your child so that in the long run you have ample accumulated funds to cope up with the growing inflation. Also, save a separate fund to deal with situations like a medical emergency or any other eventuality.

Take Assitance of Financial Expert

To create a strong financial portfolio and to save in the right manner you can take help from the financial experts. Financial planners will help you make the right investment choice and will also guide you in the process of financial planning.

Wrapping it Up

It is a fact that life changes radically after the arrival of a baby. For every parent, the wellbeing of the children is the utmost priority.  Even though most of the parents want to fulfill the dream of their child of a secured career, it is a difficult goal to achieve without proper financial planning and the right investment. In this era of innovation and competition, it is extremely important to provide your child with the best guidance and support practically and financially. Thus, it is important to follow these simple tips to create a foolproof financial backup for the secure future of your child.

Written By: PolicyBazaar - Updated: 28 September 2020
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