How to plan your savings for your child’s higher education?

Your little one has got big dreams in his/her eyes and as parents; you have probably started saving up for him/her already. Whether your child Plan wants to be a doctor, a singer, an archaeologist or a chef; proper training will be required in today’s competitive world . There is no denying that education is of the utmost importance in building a career, the cost of which is sky rocketing each year. So how should you go about the task of saving for your child’s higher education? Here are a few tips:

Keep inflation in mind

The inflation rate of an economy is always fluctuating. Although it has been steadily falling in the recent past – the current rate being just 5.75% – it is entirely possible that the rate might shoot up in the next 5 years or more. So it is always better to account for inflation and set aside some extra money. Make sure you keep an eye out for the tax rate as well.

Save for a general course

At the young ages of 12-16, children go through phases of being attracted to many different careers. The same child who wants to be a scientist today might want to be an engineer tomorrow. Therefore it is not wise to decide your savings on their whims. Rather than trying to pinpoint a specific course for which to save, find out how much a general stream or particular field (academics, self-employment stream, specific profession etc.) costs and start saving accordingly keeping an average figure in mind.

Diversify your investments

Like they say, don’t put all your eggs in one basket, it isn’t practical to accumulate all your funds through any one type of instrument. . You can invest in insurance (savings plan), mutual funds, fixed deposits, hedge funds, debt funds, stocks and debentures. All of these will have different risks and returns involved. Another advantage of diversifying your investments is that the overall interest earned may be higher than that of a fixed deposit.

Look out for scholarships

It’s a fact that every year, a large portion of the scholarships offered worldwide go waste simply because people are not aware of their existence. Keep an eye out for all such scholarships through constant research. When it comes to availing a scholarship, an issue often faced by parents is that the required documentation is not ready. That’s why it is advisable to maintain your child’s documents from the very beginning.

Take up a Child Education Plan

The cost of education is rising each day. This makes it necessary to invest in savings plans that offer sufficient funds to meet the expenses at key educational milestones in your child’s life. The returns should be sufficient enough to take care of your child’s future needs even when you are not around. Several insurance companies offer Child Education Plans for this very reason.

Sooner or later, when your child has finally found the right career for him/her – one where he/she finds happiness and success – he/she will look back and thank you for planning for his/her future. We wish you all the best for your endeavors!

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