“One of the best investments we can make in a child’s life is high-quality early education”- Barack Obama
Education is a fundamental right given to all, but not everyone can afford it. Especially, when the child education plan costs have resulted in one of the biggest cash outflows for families. This rise in education inflation has majorly hit the middle class. And why won’t it, as education inflation is high with 10-12% over the years, unfortunately, it’s double of household inflation!
Data suggests that in India, the literacy rate from pre-independence has increased to 77.7% from 12%. As more and more people are getting literate, they are understanding the need for good education. Indians have seen the fact that education has helped to change the lifestyle of people in a better way!
But again, good higher education leads to higher education corpus. To avoid the unimaginable scenario of lack of funds, it is very crucial for you to roadmap your journey ahead & take the right steps for building your child’s education corpus:
Set a goal amount for your child’s higher education
Over the years education inflation saw a rise of 10-12%. Considering this, setting a goal for your child’s higher education is extremely important. Often, there is uncertainty on how much to save to diverse courses like MBA, Engineering, Master courses, etc.
Although parents do wish to have their children join government colleges, sometimes even being a good student, your child, unfortunately, might not get selected. And that is completely okay, as the competition is on an extreme level.
Now the general fees pertaining to these courses range from Rs. 2.5 lakhs to say up to Rs. 15 lakhs per annum. Not only this, in addition to this around 20 percent of the tuition fees will go for other expenses too! These expenses include accommodation, extracurricular activities, etc.
The next step would be to start a regular SIP and let the power of compounding work for you!
Keep an account for education inflation
Among medical inflation, education inflation too has taken a high road in costs! To justify this, a great example could be the IIM Bangalore’s MBA Programme that last decade used to cost somewhere around Rs.13 lakh and now it stands over Rs.23 lakh for only a two-year course. The amount has doubled.
If this is the cost now, then imagine what could be the cost in the future. Considering this double in cost, a 4-year engineering course that now costs around 12 lakhs will go up to more than 31 lakh in 2032, around 61lakhs by 2039, and so on! This is just the case if your child desires a course in India, what if they wish to avail themselves of a course in foreign universities?
Consider education inflation seriously, as it might become a hindrance in your child’s future! With a proper child education plan, you could save yourself from this education inflation.
Take the Assistance of Financial Advisor
A financial advisor is like a guiding light that helps to cross the hurdles in your journey towards achieving your financial goal. When it comes to child education plans, financial planners focus on emphasizing flexibility in their investments.
For the major initial years, they focus on enhancing your wealth to beat education inflation. With this, they focus more on equity, and as you are approaching your goal, they restructure this investment towards a hybrid fund and simultaneously towards debt!
The main purpose of this restructuring is to not only grow your wealth but to protect it too, in its later stage. A financial advisor guides you throughout your journey and they help you achieve your financial goals with a customized financial plan and approach!
Getting a Child education plan not only helps in securing your child’s education but also saves you from spending extra as the education inflation will rise in the coming years. Regular investment in the form of financial goals can do wonders in your life as well as your child!