How to start saving for your child’s education

The birth of a child is a blessed event that brings along great happiness for the family. But there's one more thing that the bundle of joy gets for its parents — immense responsibilities! What is interesting to note is that, while a big chunk of these responsibilities is about physically taking care of the child and mentoring it, the other major component is financial in nature, and this involves making adequate savings and investments towards securing your child's future. With the money aspect being such a critical part, it is only natural for any parent to have plenty of questions around investments and be confused about where to start.

A good place to start would be planning on building an education corpus.

School and college fees today are sky rocketing, thanks to the fact that most institutions these days offer a number of co-curricular and extra-curricular facilities in addition to "regular education". The kids get to be part of sports coaching, theatre and drama classes, music and musical instrument training, and a lot more. These amenities help bring out the best in the child and are considered a big plus in today’s world — in fact, they are gradually becoming a necessity. But to avail them, you would need to ear mark a small fortune, and also keep adding to it over time.

Building an education corpus is challenging, and it needs to be done with definitive goals in mind. This requires identifying major spend areas like admission fees for pre-school, school, college; the tuitions fees involved; cost of books, stationeries, transportation etc. Evaluating these heads to assign a ball park figure can seem daunting, but this helps arrive at a rough estimate of the funds needed, which can further dictate the amount you would need to put aside on a weekly, monthly or annually basis, for it to grow through investment earnings. This estimate will also help you develop a pragmatic approach towards choosing your child’s school, college etc., and prevent you from getting tricked into overspending on extremely ambitious and expensive institutions. Do remember that you would also need to keep aside some funds for enjoying a good life, and for your own future needs as well.

Money needs of the near future

Nowadays, it is common for parents to look at a pre-school for their child, at as early an age as 6 months. Reasons for the same can be many: both parents work and don't have their family nearby to help them out, or the 'help' available is not reliable enough to be left alone with the child. Also, pre-schools offer amenities, like live video feeds of the child, to make sure that the parents are at ease about their little one. As is understandable, these amenities are not freebies but come at a premium.

It is when the preschool is through, that the kid officially enters school and marks the beginning of a mega expensive affair stretching over a decade. Consider meeting the pre-school and school needs as your short term goals, for which it is important to have investments that are available for use when the need arises (e.g. while like seeking admission to a school). Short term investments like FDs and investment-based-insurance plans are some good options.

Money needs of the farther future

By the time your child is old enough to go to college, he/she should ideally have a neat sum waiting, so that they are free to choose the stream they like, attend a university of their choice, and study in a location they prefer. Despite having taken into account the cost of books, stationeries, transportation and other paraphernalia in your goal amount, by the time, your child is in college, the incidentals and expenses could have risen.

So after all the meticulous planning and accumulating, if you still fall short of funds, don’t be disheartened. There are easy education loans that can come in handy. These loans not only take care of your child’s educational needs but also his/her cost of living. The varied and easy repayment schedule of these loans, also helps take some of the burden off your shoulders.

Now, that you have a fair idea of where to start and how, get going and help your child fly high!

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