Ask any parent to list their key commitments in life and we are sure Planning for Child Education will have a top place in the list. Irrespective of whether the parent is from an educated background or someone who has not gone to school at all, parents want their children to be educated. Education, per se, is one of the costliest affairs today the other one being Medical.
Planning for Child Education is a crucial process This is why, when it comes down to selecting Child plan investment, it becomes very hard to sort the suitable one out. Also, this is one such activity which involves many steps like the ones listed below.
- Think enough and understand the educational goals
- When it comes to time scale, be realistic in your approach
- Assess the current financial scenario, decipher the trends in the past and arrive at the future requirements
- Ensure you consider the constraints involved in the savings process
- Take into account the probable influence of external factors on your plans
- Plan in the manner that every effort of yours culminate towards the common objective of offering your child the best quality education
- Ensure to devise an alternate plan just in case the base one gets deviated from its original purpose
- Visit your plan and its progress in periodic intervals so the purpose of the same is achieved
Now that we have understood the outline of process involved in planning for Child Education, let us have a detailed look at some of the crucial points mentioned above.
- Think enough and understand the educational goals
Starting early to plan for your child’s future educational needs is indeed a good thing to do. However, fluctuations in the economic scenario will not allow you to have a clear picture too early in life. Try to assess the interests of your child during early stages. Form a tentative plan right during the first few years of the child based on your observations which may undergo change later. Starting early is the key. Get in touch with a good Financial Planner who will have rich experience to provide you appropriate guidance.
- When it comes to time scale, be realistic in your approach
Time scale is an easy factor to fix when it comes to planning for your child education. Calculate the number of years left for the child to complete his schooling. Major education expenses that require long term planning start during the last few years of schooling. Based on the number of children you need to educate plan your savings working in a backwards manner. A good Education plan is what offers you a sort of flexibility among the maturity period as it will be a great help during payment of Course Fees in Different Sesssions .
- Assess the current financial scenario, decipher the trends in the past and arrive at the future requirements
Constantly monitor the inflation rate pertaining to education. Calculate the probable requirement in the future based on the trend of the prevailing inflation rates. Seek the help of a Financial Planner who will set your expectations right for planning your Child education in the future.
- Ensure you consider the constraints involved in the savings process
When you plan to save a particular amount for your Child education, ensure you take into account all possible hindrances that may halt the efforts. Some constraints may be unanticipated emergency expenses like medical which may eat away your savings intended for your Child Education. There are many ways you can safeguard your plan for your child education. A good Financial Planner will be able to guide you through the process to secure your plans for your child education in the perfect way.
- Take into account the probable influence of external factors on your plans
External factors play a crucial role in carrying out your plan for your Child’s Education. External factors may also act in a detrimental way spoiling your plans for your Child’s education. Some such external factors are change in educational policies pertaining to eligibility criteria, admission process, related taxes etc. These may force you to go in for alternate options which may most likely be costly ones than you anticipated.
- Plan in the manner that every effort of yours culminate towards the common objective of offering your child the best quality education
Planning for different buckets of savings is a prudent thing to do. While higher level education starts almost at the end of schooling, tuition fee, special coaching and extra classes need to be taken care too. Thus, look out for Child investment plan that offer you these, separate buckets kind of approach. Having separate buckets of savings and investments help cope up with education expenses that need to be incurred during short term, medium term and long term. Equity Mutual Funds come in handy when the long term Child education planning is concerned. Small Investment Planning (SIP) will help you meet the Child Education goals that are medium term in nature.
- Ensure to devise an alternate plan just in case the base one gets deviated from its original purpose
Avoid saving all your eggs in a single basket. Do not park all your money in a single Mutual Fund Product. Diversifying them in mid cap and Large Cap funds will help you manage the ups and downs scenario caused due to market fluctuations. Take the advice of your Financial Planner who will be able to guide you through the best performing Large Cap and Mid Cap Mutual Fund products. This will also reduce the risk factor involved in such market related investments helping your Child Education plans run on rails. ULIP Plans available for children and PPF savings are other options which can be year marked for your Child Education.
Final word
Take the advice of your Financial Planner and get yourself covered in a high yielding Life Insurance Plan. This is a prudent alternative to safeguard your child education just in case anything happens to you half way through the time frame. Going in for plans like Sukanya Samridhi may sound good taking into consideration the long drawn nature of the commitment. However, from an investment and inflation point of view, Mutual Funds offer the best possible solution to such a mandatory responsibility.
Revisit your plan for your Child Education in a periodical manner and make necessary alterations. Remember, the ultimate aim of all these measures is to have a strong financial plan for your Child’s education. So, prioritize the Planning for Child Education that has good track record of Growth & ease of access. Happy parenting.
