5 Reasons to Save Early for your Child’s Education

From the day a child is born, we parent to dream about the wonderful and bright future of the child. We dream of seeing them getting the best of education from the best of institutions and ultimately working in some great MNC. Well, this journey of education and getting into the best of institutes isn’t an easy one and requires thorough planning and also need you to save early for your child’s education. With the cost of living going up by the day, as a parent, I am always worried about ensuring good and quality education for both my kids. I am sure all parents have the desire to see their children getting the best out of life, and thus we wish to leave no stone unturned and spending a huge amount of money on the good upbringing of the child and later on education too.

However, I always wonder why can’t we save early for our child’s education. Back when we were growing up with three siblings in the house my parents couldn’t think about saving for our education due to less salary and regular expenses. But with time things have changed and earnings have become lucrative for most of us, though expenses are going up by the day too. So, it’s a must start to save early for your child’s education.

Here are 5 Reasons to save early for your child’s education

1. The increasing cost of education- Due to unprecedented rise in tuition fees over the past few years. It would be a great idea to start saving early to secure more funds.
2. The multitude of career options- With so many career options available children may want to pursue more than one career option. And in fact, it’s quite common now to have more than one career option and I know my children won’t be any different. So, saving early for your child to open his wings and learn as much as he wants is the best thing to do.
3. The burden of education loan- While an education loan is a savior for most parents but it may not be a great solution for parents. Your child will have to spend over 5-6 years of his initial career and monthly savings in paying back the education loan. As a result, the child may get late in planning for his future life. And top of this education loans has huge interest rates as well. So, all in all, it’s better that as parents we start planning for our child’s education in advance rather than putting them through the stress of education loan.
4. Rising aspirations- With each passing day kids are becoming more and more aspirational and they come across new opportunities and possibilities. And on top of it, there is enough peer pressure for your child in this fast-paced competitive world. The best way to plan for these aspirations is to plan a substantial amount of money for the future educational goals of your child for early childhood.
5. Education in a foreign country- Indian students going to aboard for higher studies has become quite common in the past few years. Thus, the higher cost of studying in foreign universities can cause a huge dent in the savings. So, it’s ideal that parents start planning it.

So as a parent what do you think when and how soon should we plan for our kid’s education?  Is it when your child is 6 years old and ready for his/her first big school? Or when we are planning a child or when we get new of having a child. Well, keep the above-given parameters in mind I strongly believe earlier the better. Even we have started investing for the future of both our children while they are under 5-year-old.

By starting to save for a child’s higher education when your children are young, you’re giving yourself enough time to create a realistic goal and save better without any stress. Any extra money available in your account will continue to grow tax-free until it’s time for college.

There are various investment options available that help in saving decent money for the child’s education. Keeping the education goals of your child in mind you can accordingly save the money.

For example, if you are looking to save wherein you will need to use funds within 2-7 years then you can invest in income or bond funds. And if in case you need to use money in less than two years then look for some short-term funds.

If you are looking to save money for long-term investment wherein the money will be used say in 7-12 years for higher education then SIP and Equity Mutual funds are a great option.

A SIP investment can help you save from as little as Rs.500 each month, and it can help you to accumulate a sizable amount over time to reach your goals. For other goals such as school education, your investment plan should look slightly different.

To save more effectively and as per the future needs of your child, you could easily check the tentative education expenses on this L&T child education calculator that I found to be quite useful for planning the investments and savings for my kids.

 This helped me hugely plan on the investments I need to make today to ensure my kids achieve their dream of becoming a doctor, engineer, pilot, or even go abroad for their higher studies.

My detailed research and market analysis helped me understand how savings in Mutual Funds can make it possible for my child to attend the school of his or her choice. And trust me the most important is the time when you start saving. Time and consistency are the greatest skills and saving early (investing) and on regular basis will help a lot to achieve long-term goals.

Since we are looking to invest for our kids in long term we decided to go ahead with Mutual Funds as they help to reap long-term benefits as well. And I strongly feel a good strategy is to identify different types of  Funds and choose the right Mutual Fund investment for each financial goal. After thorough research, we came across L&T Mutual Fund. They offer various options to invest and smartly save money to achieve all short- and long-term goals. They have equity funds, fixed-income funds, hybrid funds, FMPs & Closed-ended funds, and even smart SIP combos to make the deal sweet for you. You could find all the details listed here and as per your needs, you could easily fit into one of the categories provided by L&T Mutual Fund.

It’s ideal to save early for your child’s education, in fact even before he begins an elementary education as this can help you reduce the burden of taking high debts to pay his or her higher education. And we should forget the benefit of starting early is to bag all those years of compounding returns. For example, if you are newly married and plan to have a baby in the next 5 years’ time, and beginning to invest when after the child is born then you are losing out on all these years of compounding returns.

We have made smart choices early on for our child’s education. Do check out all the investment options available in the market and choose one wisely that helps you achieve your financial goals effectively. Always have the habit of reading the scheme related documents before investing to understand the scheme type, investment patterns, and the risk factors associated with particular investments, and consult your financial advisor to understand the implication of any investment

Disclaimer: This information is for general information only and does not have regard to the particular needs of any specific person who may receive this information. L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates; does not guarantee/indicate any returns/and shall not be held liable for any loss, expenses, charges incurred by the recipient. The recipient should consult their legal, tax, and financial advisors before investing. The recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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