If you are a parent, chances are you spend most of your time worrying about your kid - their future, their education, their well-being, among other things. Providing quality education for your child will always be one of your top priorities. After all, education is how your kids will get equipped with the skills and knowledge needed for them to achieve their goals. The importance of education is indisputable. This is why you must start planning for your child’s education right from the day they are born. It may seem intimidating, so here is a handy guide to help you through:
Create a timeline
The timelines are pretty straightforward. First of all, understand that this is going to be a long-term investment. Then, look at the crucial milestone, when your child might require additional funds for higher education, for a professional degree, etc. And remember, it is never too early to start investing in a child education plan.
Estimate the cost of education
The single most important thing in planning for your child’s education is estimating the amount of funds that would be needed so your kids can live their dreams. In the process of determining the total cost of your child’s education, keep in mind that you have to factor in inflation. The actual cost will depend on a lot of decisions as well - will your child study in India or move abroad? Will they pursue an arts degree or a technical degree? What discipline is your child likely to choose or is interested in? With the rising cost of education, parents must plan for their child's education as early as possible.
Assess your existing assets and liabilities
Before exploring the avenues for investment like Child Education Plans, you need to also do a recce of all your existing assets and liabilities. You should know where you stand currently, in terms of investments and savings.
If you already have investments in a PPF account, mutual funds or fixed deposits, you might want to consider diverting the returns from such funds to your child’s education or time them to receive returns that can be diverted to this purpose. You need to be careful, however. Do not invade the investments made for other financial goals. Do not tamper with your retirement funds. If you are prudent enough, one financial goal will not compromise on the other.
Prepare for the unexpected: get insured
As they say, ‘hope for the best, prepare for the worst.’ You need to consider the worst-case scenarios: how will your kids afford quality education if something were to happen to you? How will your child cope with your untimely death, not just emotionally but also financially? The loss of the primary breadwinner is likely to hit your family very hard, and it can potentially throw all plans and goals of your kids into disarray if not provided for.
This is why it is important to have an insurance component in your financial portfolio. It can serve as a financial cushion in such situations. Your beneficiaries will receive the proceeds from this plan that can help them with their daily expenses and funding for major milestones in life.