You want your children to be successful. But can you afford their success?

TomorrowMakers ™

You want your children to be successful. But can you afford their success?

03 April 2017
Did you know that inflation is education costs is higher than the national average? Here’s how you can manage.

As new parents to a baby girl, Solapur-based Rajesh and Vinita Kale wanted to give her the best education possible. So, they moved to Mumbai, where Rajesh got a job as a middle-level executive in a BPO, and his wife joined a company as an office assistant. To help look after the baby, Rajesh’s mother moved in with them too.

Great expectations

Like all new parents, they couldn’t stop gushing about their baby to everyone. Most people responded fondly to their incessant chatter about their daughter and their big plans for her in Mumbai. But Sailesh Gadgil, Rajesh’s team leader, did not respond with the usual “oohs” and “aahs”. Instead, he asked one question that stumped Rajesh: Whether he was saving enough for the future he was planning for his daughter.

Rajesh realised that even with a double income, they were barely meeting their living expenses. He heard that school fees, even in the playschool in his locality, were close to Rs. 30,000 a year. So, they consulted a financial planner to devise a plan to save enough for their daughter’s future.  

Related: Child insurance: How to make sure your child gets funds at the right time

Reality bites

If you are facing the same problem as Rajesh and Vinita, here’s what you need to know about education today.

Your child may want to become a business magnate, a pilot or a sportsperson in the future, so ensure you are prepared for anything and everything. But how do you go about planning for the future, and where do you start? Start by calculating the cost of your child’s higher education.

Related: Using mutual funds to plan for and fund your child’s education

Calculate future education expenses

An education calculator is a handy tool at this stage. It helps visualise various education scenarios over the timeframe that you have estimated.

With the help of certain algorithms, such calculators ascertain the rate of inflation and even currency exchange rates, in case you want to save for higher studies abroad. Based on these calculations, you can arrive at a ball park figure. This can give you an idea about your monthly savings for your child’s future.

When you have a fair idea of how much you need to save, you can choose a product or combination of products that will help you reach this financial target. Whether it is your child’s education or another financial goal, investments must be chosen based on your risk appetite.

The other important factor you must consider, is inflation. Rising prices must be factored in when calculating the expected rate of returns.

Related: How prepared are you to meet your child's education cost?

Choosing the right product

If you do not take inflation into consideration, chances are that you might end up choosing an investment product that gives low returns. This could result in you losing money, which could ultimately impact the quality of education you give your child.

As a parent, you dream of your child reaching the pinnacle of success in whichever field he or she chooses. The cost of her dreams is what you need to be prepared for from a very early stage. So do not make the mistake of delaying the process of investing for your child’s future and begin today!

 
 

MOST VIEWED CONTENT

Simple ways in which you can diversify your financial portfolio

Simple ways in which you can diversify your financial portfolio

As an investor, diversification, when done sensibly, helps you balance out risk and optimize returns. Here are some useful tips on diversifying your financial portfolio across assets.

7 Must-have things for a frequent traveller

7 Must-have things for a frequent traveller

All smart travellers know that there are certain things they must take with them to ensure their journeys are enjoyable, safe and stress-free.

5 things you need to know about the NITI Aayog lottery

5 things you need to know about the NITI Aayog lottery

Still wondering if you should #GoCashless? This lottery scheme will help you decide.

What does it cost to educate your child in India [Infographic]

What does it cost to educate your child in India [Infographic]

Education is a gift we all want to give our children, but as it gets costlier every year, it becomes more and more essential to plan our financial from the start to ensure that we can afford to send them to quality institutions.

What is ASBA? All you need to know

What is ASBA? All you need to know

Everything you need to know about ASBA (Application Supported by Blocked Account) and how it helps investors.

Best Destinations in India for every budget

Best Destinations in India for every budget

Choosing a travel destination to travel in India boils down to your preference and budget. Fortunately, there’s a destination for everyone.

Locking your Aadhaar card biometrics can prevent misuse

Locking your Aadhaar card biometrics can prevent misuse

Your Aadhaar card contain sensitive data that only you should be able to use. So how do you keep this information safe.

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER