As parents, it is natural to want the very best for your child – the best schooling, best opportunities in life, grand marriage function etc. But you see, education is one of the best gifts your children can receive.

And as Indians, it is strongly ingrained in us that education is everything, and we want our kids to go to the top schools for their chosen fields.
Even though education is the most important priority for parents, the costs are a major concern. They shell out a large portion of their savings to provide the best education.

Hence, a financial plan to achieve this goal is very important.

If you already have children, the earlier you start planning, the better.

Especially if you want your child to attend good institutions and abroad,you must begin planning soon as the education costs consider highest inflation rise.

Waste no time

Planning for your child’s education is a long-term financial goal. The best time to start planning for your child’s future needs is when he or she is born. Assuming your child will go to college at the age of 18, you will have nearly two decades to create the right-sized fund for your child’s need. The effect of compounded growth will allow you to achieve this goal with small, monthly contributions.

Avoid low returns investments

Children’s education is typically a long-term goal, and as seen from the above example, there is high cost inflation here as well. Therefore, you should invest through instruments that provide inflation-beating returns. A long investment tenure allows you to take moderate levels of risk, which can potentially produce high long-term returns.

Plan for inflation

With inflation, higher education becomes more expensive each passing year. In 2018, a premier business school raised the fees for its flagship two-year course to Rs 21 lakh. In 2008, the same course cost Rs 6 lakh. Thus the cost has grown at an average rate of about 13%. Assuming a similar inflation rate, the same course may cost Rs 69 lakh in 2028. While calculating your child’s education funding needs, it is important to assess the future costs of education.

Start small and step up

It’s easy to be daunted by the astronomical money requirements. However, while investing towards any goal, you should implement the concept of stepping up. For example, you earn Rs 50,000 today and save Rs 10,000 per month. Next year, if your income increases by 10% to Rs 55,000, you should increase your savings by 10% to Rs 11,000. Stepping up your investments each year allows you to start with baby steps when your income is small, to bigger steps as your income grows.