How to Plan for Child Education?
Education costs money, but then so does ignorance. Congratulations on deciding on the former! With the global slowdown, this is the best time to upgrade your skills so that you are ready when the economy picks up again. Moreover, most banks give educational loans for the entire amount quite easily, so its easy to finance your education and pay back once you find your new job or even during your course from investment income.
|Follow our simple guide so that its assignments and exams you have to worry about, not how to payfor your tuition.
How much will an education cost?
The cost of education has increased by leaps and bounds in India, while most of the western world has had a slower education inflation over the years. The costs can vary considerably depending on the course and university/college you choose. The expense categories you are likely to have are below. Make sure you have considered every one before arriving at the final cost:
- Entrance fees, seat booking etc. – if there is an entrance exam for the course, you should plan for all the exams you have to write, associated travel etc. Also, if you are applying to multiple schools, then some might charge you an upfront payment to book your seat once the results are declared. If you end up getting through a better college, you might lose this amount and it can be significant.
- Tuition fees – this would most likely form the bulk of your expenses, but some universities do cover these expenses if you quality for a scholarship or receive assistantship.
- Books, other educational material, and stationery – in some universities, this cost is included as part of the tuition fees. If the college does not provide text books and other material, make sure you account for this through your research as this could be a significant expense, especially for post-graduate courses in India or abroad. You can always skimp by taking up a library membership or using the college library.
- Laptop/Computer, Internet, Software – many universities now expect you to have a laptop. Find out if the university includes this in your fees or provides laptops are reduced rates. Also, student editions of software are significantly cheaper.
- Living expenses – some colleges insist on students staying at the college, while some don’t provide for it. If available, opt for this as this can save you a lot of expenses and time. If you are staying outside, make sure you account for transportation, food etc.
- Uniforms, formal wear etc. – if you are planning on a professional course, this can be a significant expense, so make sure you account for it.
- Placement services – if the college has its own placement cell, this expense is factored into your fees. If you have to go on a job hunt yourself, make sure you account for travel costs, hiring a placement professional etc.
- Travel – for most courses, you have to travel for seminars, interviews, internship etc. This can add up to a significant expense and you should budget for this, especially post-graduate and professional courses.
Save for Child Education
Once you’ve arrived at the cost of education, its time to plan to reach that goal. Make your budget to find out how much disposable income you have at this time that you might use to finance or save for an education. Be sure to adopt a realistic savings plan for you that you can afford and sustain on a long term basis.
Once you know how much you can save, use our How-tos listed above to find out how much you can expect your savings to reach by the time you need it and how much loan you can afford.
One way to save for education for a young child is to take out a Child Insurance Plan.
The earlier you save, the better. When a child is born if you put aside some amount of money every month, you will have a lump sum amount at the child’s 18th birthday available for his/her university expenses.
Have more questions about planning an education? InvestmentYogi’s experts are here to help.
Prepare your personalized financial plan taking your unique financial situation and goals in mind.