While these figures can seem slightly daunting, you don't need to worry. With some prudent financial planning, you can easily finance your child's education. Wondering how? Here's a handy guide that will show you.
1. Start by Understanding Your Child's Goals
As your child starts to grow, you'll be able to understand what they're passionate about and what they may have an aptitude for. By the time they reach the age of 10 or 12, they might have an idea of what they'd like to do with their lives. Think about whether the kind of course they may have to do is available in India, or if specialised courses are available abroad. Estimate what the cost of that course may be and how much time you have to save up. If your child is 8 or 9, you have another 8 years to save. On the other hand, if your child is already 13 or 14, you have just 4 or 5 years to get your finances in order.
2. Factor in Inflation
Since education inflation is increasing at a far higher rate than regular inflation, it's imperative that you consider this while mapping out your financial plan for your child's future. While the average rate of education inflation over the last 10 years is 7%, it's a good idea to consider the rate as roughly 8-10% or higher while calculating the amount you might have to shell out for your child's future education. This way, you'll err on the side of having excess finances, instead of being left with too little to fuel their dreams. We can understand the problems this could cause with an example.
Currently, a good business school has a fee structure of Rs. 25 lakhs. If we assume that your child will attend this business school in 5 years, and the rate of inflation is 8%, you'll end up paying roughly Rs. 37 lakhs. However, if the rate of inflation goes up to 12%, you'll have to pay Rs. 44 lakhs in 5 years!
3. Choose Your Financial Tool
Now that you have a better understanding of the timeframe you're looking at and the kind of money you might require, it's time to pick the financial tool that will help you meet your goal. There are a number of investment avenues available to you, so it's important to make the right choice. HDFC Life's Click2Invest ULIP could help you with this. Apart from being an investment plan, it also provides you with life cover, so if anything were to happen to you, your child would have financial protection from the life cover that ULIPs provide. HDFC Life also has a number of Children's Plans, which have been created with the specific aim of helping you finance your child's future and provide them with everything they need.
Now, all that's left to do is start your investment plan as soon as possible, so that you and your child can reap maximum benefits. If you're ready to secure your child's financial future and give them the wings they need to fly, click here.
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