Education and Marriage Are Two Significant & Unavoidable Steps In Every Parent’s Life.
Financial Planning For Child Education and Marriage
It is aspiration of every parent to give a good education to the child in top most University in India or abroad for higher education to set a bright future for child. It is also a dream of parent to conduct a lavish marriage for their children. If both of these are not planned properly then it would cause a heavy burden and debt to parents life at an challenging times. You have only two options in front of you. One is start saving now and just take the loan for shortfall at later stage and other is take the loan for entire education, then pay it later. Now, if you ask which one is better. Then definitely the first option is better because you will not have last minute stress and burden of re-payment of the loan. Additionally, in first option, your money if you start financial planning for your child’s education early then you will have longer time horizon to build corpus smoothly along with Power of Compounding.
The below are the cost of education figures in India and abroad in conservative figures so you can do start financial planning for your child’s education well in advance. Inflation of cost of education in India is about 10% to even up to 20% in well-known institutions private institutions. Consider the inflation figures before you start plan.
Important Tips for Children Education Financial Planning
- Check how much time you have for your child to go to graduation and post graduation.
- Determine approximate the cost of education presently in India and abroad. It depends on weather your child would wish to have global exposure and the discipline picked.
- Consider the rate of inflation with the time interval, the cost of education will increase to how many folds. Build this corpus at one go, may not be easy for everyone. Hence, start planning early.
- Assess your existing Assets and Liabilities. Consider any other investments made for child’s education might help him reach the determined corpus.
- While making financial plan for child’s future avoid dipping your other financial goals like retirement planning but at the same time, do not dip your child’s education plan for other less priority expenses like renovating your home, expensive vacations and so on.
- Once you know the cost, consistently put some money out periodically to met the goal.
- Save and invest regularly so you don’t have to take loans or sell your hard earned assets in the future which can be costly afair.
- Plan your investments smartly as savings alone will not be of any help as inflation bug will erode the savings value.
- Have an Adequate Insurance Coverage for yourself especially when you have family and it’s responsibilities to be fulfilled.
- Prepare yourself for the unexpected. For eg, additional cost like tution fees, pocket money, accommodation and so on. This is particularly important if your planning studies abroad.
Have you considered what will happen to your dream of giving your child the best possible education, in case you have an untimely death or meet with an accident that impedes your physical ability to earn? One of the biggest potential setbacks to a child’s education is the demise of the breadwinner in the family and the lack of insurance. Ensure that you have enough life and health insurance to at least cover the tuition fees of the school and college your child will possibly attend. You see, there are ways to achieve your family goals even in your absence. But that can only happen if you have the right amount of insurance for your family’s financial goals and regular expenses to still be met. Likewise, optimally insure for health. Not having an adequate medi-claim cover or one at all can potentially derail your financial goals if medical emergencies arise.
To know the appropriate amount of insurance cover and plan well for your child’s future, consider contacting us.