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4 smart tips to plan for your child’s education expenses

Feb 07, 2018 | 2 years ago | Read Time: 3 minutes | By iKnowledge Team

The total cost of raising a child in India from cradle to college is about Rs 54.75 lakh, according to an ET Wealth report. The number is likely to balloon further in the years to come, given the way education costs are rising unfettered in the country. This can be unsettling. But it won’t if you start planning your finances right away. This is where this article can step in and help you take steps to ensure your child gets the best education you can provide.

  • Tip#1: Start saving, earlier the better

Start planning as soon as you become a parent. You may think it’s too early. But, it isn’t. Starting early will give you sufficient time to prepare for your child’s future. Saving a certain amount every month can be a good start. This can help amass enough money to fund your child’s schooling.

Discipline is important as well. Saving irregularly will not serve your purpose. So, make it a conscious effort to save regularly.

  • Tip#2: Saving is good but investing is better

You need to prepare for your child’s college education as well. In fact, college education can be a very expensive affair. Just to give you an example, management studies fee at Indian Institute of Management-Ahmedabad (IIM-A) has almost quadrupled in the last ten years. Therefore, saving for your child’s higher education becomes paramount. But, merely saving may not be enough in this case. You will need to invest your money.

Remember, there is a big difference between saving and investing. Saving can help you accumulate money but inflation can eat into your saved amount. Investing, on the other hand, can help your money grow over a period of time. It has the potential to give you returns that can beat inflation.

So, the next question that arises is where do you invest your money?

  • Tip#3: Research. Assess. Invest

You need a plan that ensures your money grows over time. But, you need to assess your risk appetite first. Take time out to do some research. So, if you feel you can take risks, you can opt for stocks or equity-linked funds. These can help you meet your financial target in a shorter period. But its downside is that you stand a chance to lose money.

On the other end of the spectrum lie fixed deposits and debt funds. These are safe and guarantee you fixed returns. But investing in these can take you a long time in achieving your financial goal. That’s because the returns may not be as high as stocks can offer.

You can also choose to invest in a mix of safe and risky products. Diversifying your investment can help your money grow at a faster rate, sans the bogey of high risk.

  • Tip#4: Control the uncontrollable

Safeguard your child’s future by taking an insurance. This will ensure your child’s education is not in a funk if you are not around. Better still, think of a unit linked insurance plan (ULIP). These plans can secure your child’s security and also help your money grow. One such example is Aegon Life’s iMaximize plan. You can start investing in this plan with as little as Rs 2,000. There are no allocation charges either. What this means is that this plan can help you save a little more than compared to its competitors.

The last word

You don’t have to move mountains to pay for child’s education. You simply need to start saving early, find the right investment option and insure your child’s dreams to spread their wings, and take that flight in life.

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