According to this news report, the ASSOCHAM (Associated Chambers of Commerce and Industry in India) estimates that higher education costs have jumped a huge 120% in the last decade, and are expected to show a further upward trend in the coming years. This means that a course that costs Rs. 10 lakh today will cost upwards of Rs. 30 lakh or even more in the coming years. Unless you do careful financial planning for your child, you could face an uphill task trying to pay for their future education.
Consider investing in a child insurance plan for your kid's future.
Why take a child insurance plan?
The benefits of child insurance far outweigh any negatives or doubts you may have about the efficacy of these plans. These plans are designed to see you and your child through the latter's higher education.
In case you are unable to eke out the funds to pay for your child's further education, the child plan takes care of the costs for the same. It gives you a much-needed breather and you can use your income at that point for other purposes like savings or investments. Besides, the child plan is meant to cushion the child's dreams in case of the unfortunate demise of the parent the insurer continues to invest in the plan after waiving off the remaining premiums.
Make sure to calculate the sum assured of the plan by factoring in future inflation and the potential costs of the course of study your child wishes to pursue. Also, the power of compounding often helps create a large corpus for the future, so it is advisable to start investing in this plan when your child is still very young.
Other child financial planning options
Nothing can beat the best tool in financial planning for your child: regular savings. It might seem difficult to save money in the face of mounting expenses for a family, but the savings habit can hold you and your loved ones in good stead for the future.
Along with your own savings, teach your child how to save money from their pocket money every month. Encourage the savings habit and teach the value of responsible spending they can save up to buy themselves a new toy or game. You can deposit your child's savings in their savings bank account or open a PPF account in their name. A minimum deposit of Rs 500 can be made per year in a PPF account. You can use the money from the PPF for your child's education.
Other options include investing in gold ETFs, mutual funds using SIPs and even short term bonds.