Planning your children`s education expenses and career

Child education is one of the top priorities of a parent. Or, rather should be, one of the top priorities of any parent.

Parents dream that their children become doctors, engineers, etc.

But, few plan or take in to consideration the fees of such courses and plan for these expenses.

Though, I believe, education is not a cost. It is an investment, and this investment will give returns and help your child earn a livelihood and be self dependent in the future, the expenses need to be planned properly.

I am talking about higher education here.

Following are few steps required to be taken to plan your child`s education :

KNOW WHEN YOU MAY REQUIRE MONEY :

If your child is 5 years now, and you require the money, when he is 21, you got 16 years to invest and contribute to that fund.

TAKE INFLATION INTO THE PICTURE :

As per the recent numbers, education costs are increasing by 10 % per year from the last couple of years.

10 years back, you could do MBA at 1.25 lakhs or 1.5 lakhs, but today it costs more than 4 lakhs. ( inflation = money losing purchasing power )

Education costs in India, are rising at high rates.

Lets assume this rate as 10-12 % to plan further.


DECIDE THE AMOUNT YOU WILL INVEST PER MONTH / YEAR :

You need to make a commitment to this goal, by taking out money, and investing it, in order to achieve this goal.

Be disciplined enough to invest regularly.


INSURE YOUR SELF ADEQUATELY :

Remember, your child depends on you financially, so, if you are not there tomorrow, all these plans will not materialize.

Adequate Life insurance and not just life insurance is the solution here.


PLAY IT SAFE :

If you choose to put your money into riskier asset classes such as equity, it is sensible to pull out money from such classes and invest into fixed deposits or instruments which give fixed returns, even if they have a lower yield.

This will prevent money getting lost, if at all a correction happens in the stock market.


Lastly, I must add :

Not all children can be doctors, engineers.
Some have different talents, some may do well in the field of music, dance, etc.
One size doesnt fit all !

Career counseling does help.

Let the child follow his own interests and you need to guide him in life but you cannot take all decisions your self.

I believe, the role of a parent should be to make the child independent in life and inculcate values in him.


Good luck.