How to Save Money for Your Child’s Education

Being a parent is tough. I am a mother to a 14 months old boy and I am overwhelmed with joy. But with all the other emotions, I always feel that I have the responsibility of giving my child the best of education.

My husband and I have been discussing about how much money do we require saving for his education, how to save, where to invest, which education savings plan should we consider and so many other things are on our list.

With the inflation, the cost of education is increasing and where will it go, we don’t know.

But as parents, we have to try our best. I am sure every parent can relate to us on this.

Child education is one of the major expenses that you would need to worry about. Not all have the well of money, some would need a plan to make sure of everything.

The day your child is born, the mindset of every parent gets changed. You are likely to think more about your kid. How you can secure your child’s future and so on?

In this particular blog post, you will read and understand the in and out of how to save money for your child’s education.

Through this blog, I intend to help the new parents who are looking for some kind of guidance.

How much to save for children’s education?

Education cost has sky-rocketed and it will keep on increasing. Since I am living in India, and over the years I have seen how the education sector has become.

You would want not just the education but the quality education for your child. Education today is no longer a traditional academic, the pattern which you and I have followed perhaps.

There is so much competition around the private schools mostly are upgrading themselves in terms of technology.

Parents are ready to pay a huge amount for their child’s future. But here lies an issue.

How will you determine how much will you have to pay for your child’s education after 17-18 years may be?

It’s hard to calculate and analyze.

For example, today in 2022, the fee of 2 years MBA course at a reputed B-School is nearly 18-20 lakh. I am assuming, after 15 years from today it will increase consistently.

You have to plan accordingly. You have to sort out your sources of income, make concrete plans, invest in reliable places where you can grow your money.

Even if you calculate, you will never get an accurate number. But certainly, the education cost will continue to soar and could even cross 50 lakhs.

In a nutshell, as parents, if you want to give your child the best, be prepared financially.

Now,

How to Save Money for your Child’s Education?

Either you stay in India or in any other nation. If you have a kid, you have to think about how to finance their education.

Let’s jump directly into the points –

The earlier you start, the better

When should you save for your child’s education?

If you ask experts, they will always say the early you start, the better opportunity you will have to save more and invest for long.

Due to the fact that education cost is increasing every year, to stay on the safe side, if you start early it will give you more time.

Unfortunately, parents those who don’t have enough saving, they can not send their child to the best institutions unless their kid gets a scholarship.

The more time you will have, the more you can save and compound your money.

For example, if your baby is 2 years old now, you have 17 years of time to accumulate the education cost. Based on your income, you can analyse how much can you save separately for your child’s education.

There are several ‘education savings plan’ where you can invest your money and with the given time it will compound your money and grow.

But suppose you are laid back about your financial decisions and started saving up for your child’s education later in the future, you will need higher monthly savings.

Your cost of living will increase and with all the EMIs, bills to pay, a higher monthly savings is likely to get difficult to achieve.

Your laid-back decision will certainly hurt your finances and might stress you as a parent.

Calculate the approximate education cost considering the inflation

As parents, it is natural to want the best for your kid. You are working hard and earning for your family.

In the times of inflation, when everything is getting costlier and surviving becomes a matter of question for any middle-class family income holder.

Yet, you would wish to give your kid better education and a better life. To save money for your child’s education, you must get your maths correct. You would need to sit with a pen, paper and calculate how much it may cost after 10 -15 years from now.

Calculate your income, hike, household expenses, EMIs and other things that might need your consideration to save money.

You can apply for an education loan, before your kid applies to colleges. But you will be in debt at that age of yours.

Banks are always ready to loan you. They are the best at it. It might even solve your problem for a while. You kid will get the best time of their life, probably. But it will leave you with a loan to repay with an interest.

Thus, how much does a child’s education cost?

Calculate in every possible way. Look for the options, which are practical and take a sound financial decision.

In reality, you can never calculate what will going to be your child’s education cost because it varies with time, courses and location.

For instance, if you kid studies medical from a private medical college, you will have to bear a heavy amount. If your kid goes to aboard for studies, the cost will be even more.

If your kid studies marine engineer with a scholarship, you will have some respite.

Thus, you can assume an approximate education cost picturing years later, but again, the scenario could differ from what you think.

As parents, you can only be financially and mentally ready to be able to provide with some financial help to your kid.

Analyse the investment option

What is the best investment for a child’s education?

There are several investment options available in the market. Select an investment option that goes with your goal.

You can either go with the private education savings plan like mutual funds, bond or you can opt for any Government scheme.

It can be a costly affair, hence you have to carefully study and choose a long-term investment option that can benefit you in achieving your target financial goal.

Compare every investment plan. If you cannot decide, talk to a professional finance expert.

Do not put all your money in one investment plan, better you diversify your portfolio. As it will be a long-term investment, it would be better if you choose a low-risk investment plan.

For example, after researching and looking into several investment options, I found the government scheme PPF a better option for investment. As it is a long-term investment plan, by the time my kid will be 18 years-old I could accumulate a lumpsum amount for his education.

Similarly, many parents find investing in mutual fund a better option to secure their children’s future.

Thus, choose what’s best for you, where your money won’t sink and you can be stress free for your child’s future.

Reduce unnecessary expenses

When you want to save money for your child’s education, you would need to strategize your finances. You would need to simplify your finances. Find frugal ways of living a peaceful life.

You must look into your household expenses and find out gaps where you can save money. Because the more you will save, the faster you can meet your target.

For example, you have a target of achieving 70 lakhs in the next 15 years, make a budget and set a financial goal. Calculate an estimate of how much you have to save yearly to reach your target.

The best way to save money monthly is to reduce energy bills, avoid overspending, and track your money regularly.

The purpose is to save efficiently and effectively.

Turn savings into a habit

When you plan for a long-term savings, you should have to develop a good money habit. As securing your child’s future is important, you would obviously don’t want to make a mistake.

Thus, you must build some good habits and take wise financial decisions. Make several small financial goals and stick to them. After each successful goal, reward yourself that will motivate you to for the next one.

Keep a habit of tracking your spending regularly. Take your finances serious. Even if you are earning a decent figure, you don’t have to spend it uselessly. Invest them and grow your money. Help others if you can with your small contribution.

Never get distracted from your financial goals.