A Detailed Guide On How To Plan Child’s Education Fund
Mr. Talukdar lives in Kolkata with his wife and 3 years old son. Though Mr. Talukdar works in a small private company, he wants his son to be a computer engineer. It will take 15 years for his son to become a graduate.
If the cost of graduation in today’s time is Rs 5 lakh, then how much does he need to spend to send his son to a reputed engineering college in 15 years? Let’s evaluate it.
|Cost of Graduation in Today’s Time|| |
Rs. 5 lakh
Time left for Graduation
|Inflation Rate|| |
10% p. a
The Cost will be at the Time of Graduation
|Rs. 20.88 lakh|
|Mr. Talukdar needs to Invest per Month|| |
The cost of education after 15 years will be Rs. 20.88 lakh due to inflation and to accomplish this goal, Mr. Talukdar needs to invest Rs. 4180 per month. But if Mr. Talukdar starts his investment a few years later from now, then he needs to invest more amounts per month for his son’s education.
If you also want to ensure the best child education for your child, then you should be equipped financially. Every parent wants to offer the best child education plan to their children so that they can successfully establish themselves in this steep competitive era.
Education is the top-most priority for parents in today’s era. But the cost of education is increasing rapidly and thus, it’s becoming difficult for parents to meet the financial requirements for their children’s education. Now, people have understood the significance of financial planning by understanding the various benefits of a child education plan. Therefore, parents are now willing to offer the best child education plan to their children.
The cost of higher education is expensive in India as well as abroad. To offer a scintillating future for your child, you need to invest in the best child education plan in India. If you make your child’s future education plan today, you may not need to compromise with your child’s education and dreams. Always save or invest early to reduce the financial burden at the 11th hour.
Plan your Child’s Education
Here, we are going to discuss how to make your investment plans meticulously so that your child will get the best education every time.
These are certain factors used as a child education plan calculator to avail the best child education plan in India, so have a look:
- Inflation: While making your child’s education plan in India, don’t forget to consider inflation. The education fees are increasing at a faster rate over the past few years. In 2015, the fees of IIT were Rs.60,000-90,000. But in 2021, the fees are between Rs.6-10 lakh. It’s not easy for you to support your child’s education in this tough scenario if you don’t save an adequate amount. Education inflation is one of the biggest inflations in India.
- Assess your Monthly Budget: To offer the best education to your child, you need to save a certain amount per month. Decide the amount that you are planning to save every month for your child’s education through a child future education plan. Try to save and invest a certain portion of your monthly income so that in the future, you don’t need to take loans that will increase your financial burden more. If you are facing difficulties in savings, then cut down your unnecessary expenses and some personal expenses and manage everything comfortably.
- Make Early Investments: You must remember that it’s a long-term investment process to accumulate funds for your child’s education. Start investing from day one when you become a parent. In 2021, the education fees for MBA in a reputed college are Rs. 18-20 lakh. In abroad, the fees may go up to Rs. 40 lakh. Because of inflation, the charges will increase within the next 10-15 years. So, you need to understand the importance of early investment that will help you to accumulate adequate funds when your child reaches college-age.
- Never make Investments with Low Returns: It’s a very challenging task for parents to meet the education expenses for their children due to high education inflation. Thus, it is recommended to invest in the best child education plan that offers you good returns.
Ways to Secure your Child Education
- PPF for your Child’s Future: PPFs are one of the lucrative investment schemes that offer tax-free savings to investors. By opening a PPF account in your child’s name, you can start investing in this platform. PPF scheme permits you to withdraw your money after 6 years from the day of investment. Your child can also contribute when he/she becomes an adult. In this scenario, the account will be extended. A PPF account is counted amongst the best child education plans in India.
- Choose a Long-Term Investment Plan: The financial goals are not the same for every investor. These depend on individual requirements and needs. The markets are flooded with various investment options like gift funds, debt funds, and so on. If you are planning to invest for longer terms, then mutual funds or equities would be the best option for you. Children’s gift funds are also lucrative options that come with lock-in periods. These types of funds encourage parents for long-term investments and offer benefits from compounding power.
- Prepare yourself for the unexpected: Always be prepared for add-on costs like accommodation, pocket money, tuition fees, etc. Though these add-on expenses may appear small, once you combine them, the amount will be a huge figure. This is significant if you want to send your child abroad for his/her education. While arranging funds for your child’s education expenses, it would be great if you have some buffer for unanticipated expenses.
The Bottom Line
Don’t procrastinate much if you want to achieve your goal. Start your investments earlier so that you will get a longer period to fulfill your goals. Moreover, within this period, you will certainly accrue a bigger amount so that your child can become successful in this fast-paced world. Spend some time understanding the different options available in a child education plan, and then pick the best child education plan in India to secure your child’s education and future.