Education plays a pivotal role in reforming an individual in today’s competitive world. Yes, a minority of the population indeed manages to make a name for themselves without proper education. But the masses go through the traditional ordeal of garnering an apt education portfolio to make a living in today’s world.
As a parent, you must provide your child with the best opportunities, including educational ones. But seeing the exaggerated expenses for educational means, it is viable for you to get confused. Plus, the extensive amount of career prospects do not help the case either.
In today’s modern world, your child can become anything they desire, given they are provided with apt circumstances. With such a huge responsibility riding on your back, how can any parenting plan for their child’s expenses? Even minor decisions like taking a look at your expenses for the month can be a daunting task.
So how can you plan for their education? While there is not a foolproof guide, you can follow, some viable tips and steps can simplify your job. Want to know about the tips?
Read through to learn the best tips to plan your child’s higher studies.
How to Plan for Your Kid’s Higher Studies?
Finalise the Time Horizon
The first step to plan for your child’s higher education is to finalise the time horizon. It refers to the period when your kid will be entering college for graduation and post-graduation. Make an approximate assessment of the years, and that is your time horizon.
If the time horizon is longer, it is a positive sign, meaning you have apt time to make preparations. The closer you are to the horizon, the harder the job will be.
Make a Thorough Education Cost Evaluation
Now that you know the period you have to account for, the next step is to ascertain the education cost. There are numerous factors you must consider in this step. The first question that arises is, do you want your child to study near the city or outside the country?
The second question is a part of the first one – will your child find the correct opportunities in the territory?
The third question you must ask is – will your child go outside the country for both graduation and post-graduation or merely one degree?
Once you have all this penned down, it is time to delve into the financial matters. You need to figure out the cost of education in both national and international territories. What makes the job tougher is the fact that you need to analyse the price hike by the time you reach the time horizon.
The real value of your currency is bound to fluctuate, and you must account for that. Accounting for approx. 8 to 10% inflation is a safe bet when it comes to education.
Review Your Assets and Liabilities
After chalking down the time and education cost, you must review your current financial standing. You can only prepare a comprehensive plan once you know where you currently stand. Make a complete list of your every asset and liabilities to get started.
Try to debunk funds such as retirement money and home renovation as it can hinder your plans. You can use the funds to enhance the education prospects, so it is better to dip the low priority expenses.
Open a Junior Savings Account
You may already know about the concept of a junior savings account, but if you do not, these are initiatives by banks to help children. These types of accounts proffer relatively high-interest rates than your standard savings account. Moreover, you can even get additional perks like scholarships and personal accident coverage.
If you already possess some savings for the studies, you can deposit them in the account. While the account will not serve as the ultimate measure to help your kid study in international universities, it can still act as a viable help.
Compute the Amount You Need to Save Now
After you have an estimation of the education cost, formulate how much money you need to save per month or year starting today. These days, you cannot afford to lose any more time to start saving.
The best approach, in this case, would to articulating a systematic form to reach your goals. This can be done via opting for a Systematic Investment Plan in a mutual fund or Gradual Deposits in your bank. The bottom line is; you need to save money regularly to money your objective.
If you are worried about your credits, know that building your credit score is crucial. Avoid excessive credit to ensure your options stay accessible in the long run. If you can manage your expenses comfortably, save a chunk of your income.
Go for low-interest credit cards as well so that your future is secure. For more about low-interest credit cards, checkout Creditspring.co.uk.
Even this alone is not be considered the ultimate move as inflation reduces its effectiveness. Therefore, we come to the next step – investing.
Start Investing
Investing plays a crucial role in helping you maintain ample funds whenever needed, but it has a catch as well. You must be smart with your investments.
Otherwise, you can lose it all in an instant. One way to invest your money smartly is via asset allocation.
After accounting for any pre-existing investments, you need to set up new ones to secure your child’s prospects. Assess the market and try to identify the risk factors and patterns. See how much risk you can handle, and invest to your heart’s content.
If your time horizon is longer than five years, mutual funds are the way to go. Contrarily, for a nearing horizon, prefer fixed debt or income. If executed correctly, your investment portfolio can work wonders for your financial stature.
Ensure Your Child Understands the Concept of Saving
While it may sound like pressuring your child, they must know how crucial savings is for future purposes. The more they understand, the better they will do in their life. They can even help you save some unnecessary expenses, helping you in the long run.
Plus, teaching your kid about savings and investments further ensures they possess the capability to harbour finances in a crunch.
Account for Mishaps and Get Started
This does sound negative, but in reality, the chances of an unexpected mishap are higher than you expect. Therefore, it is pivotal that you create an emergency fund for any unexpected expense. It may be tuition fee, travelling expenses, or flight tickets; you must account for such factors.
After you have gone through every step, do not postpone the plan, and start today. As mentioned above, the longer the time horizon, the better.
Planning for your child’s higher education can be a daunting task, especially if you do not know how to get started. However, some tips and steps can help you execute the task impeccably. The blog has specified the tips you can follow in coming up with a comprehensive savings plan.
So follow the tips and assist your child to avail of their desired graduation or post-graduation degree.