A beginner’s guide to education inflation. All you need to know 

With children come specific and inescapable responsibilities. It starts with providing your child with a safe home, loving and nurturing space, and quality education to help them grow and become their better selves. Yet all these needs come at a high cost. 

The average inflation rate across sectors is rocketing beyond belief and has bypassed the rate of household inflation. From basic needs to luxury, the average cost of different items has increased manifold.  

College is a lifetime experience; it offers quality education, changes one’s mindset, and opens up a vast network of opportunities. Generally, the chance to better oneself is why Indian parents and students work hard to get into some of the world’s most significant educational institutions, not just India.

Yet, this access to quality education comes at a great price. Consider the example of IITs in India; despite the devastating pandemic, the tuition fees for undergraduate courses jumped from Rs. 90,000 to 2 lakhs! Similarly, top universities in the USA 2022, announced tuition fee hikes while Canada increased its international tuition fees by nearly 5% annually across all provinces

The increase in tuition fees and other consequential education expenses results from inflation; Education inflation is a real threat to your savings. The hard truth is that it will rise even higher in the years to come. 

It has become imperative for parents to understand how Education inflation can affect their savings. And why it is essential to protect their savings via investment. 

Before we talk more about why parents should be protecting their savings from Education Inflation, let us look at some of the factors responsible for the rise in education costs. 

Factors responsible for the rise

1. The rising cost of amenities

The tuition fees don’t comprise the entire cost of education. It is also the amenities that come along with it. Food, accommodation, extracurricular, commutation, and other living expenses contribute significantly to the cost of education. 

2. The rise in the number of educators

With more universities and expansion in different courses, the demand for educators has increased as well. And this contributes notably to the overall cost of education. 

3. Increased demand for higher education

Higher education has upgraded to be a necessity from the space of mere desire. A University degree is a means to financial success and prestige in the modern world. 

4. Lower public funding

The public sector’s investment in the field of higher education is much lower than the other segments. Universities rely on tuition fees as their primary source of income which means that the burden of the cost falls on the shoulders of parents and guardians.

While you cannot control this financial phenomenon, you can strive to understand why you need to protect your savings from it. 

Why do parents need to protect their savings from Education inflation?

1. Preserve your purchasing power

The value of money depreciates with time. Even though you might earn some extra currency over time, the real value matters the value of the Indian rupee depreciating against the dollar and pound over the years.

And you need to check whether you’ll be able to retain your present purchasing power after a certain number of years. 

Consider ensuring that your return on savings is higher than the rate at which the value of money depreciates. The consistently soaring education Inflation is one of the significant factors affecting such depreciation.

2. Shield your child’s future 

With a world full of information and opportunities, your child should be free to dream about their future. And to make this happen, it is essential to shield their future against all the odds.

With proper planning and strategic allocation of your funds, it is possible to compete with the rising cost of education. 

3. Maintain your standard of living 

To lead a happy and healthy life, look at the practical aspects of things. Your savings must consider your living standard. Your funds should be able to balance between needs and wants. 

4. Make harmony with your retirement plans

You are to retire and there is no denying that. Are you willing to work this hard all your life? or, would you like to grow old sipping your coffee and relaxing while watching the rain? Life has its phases and you need to enjoy them the way they are meant to be enjoyed. 

While taking the cost of your child’s higher education into account, it is so important to take your retirement into consideration.

5. Take your health into account

Physical and mental health are pertinent to your well-being and your family’s bright future. A financially secure plan can protect you from avoidable stress, and various lifestyle diseases and prepare you for certain unavoidable medical expenses. 

Only when you are healthy will you be able to enjoy the money you are saving. Thus, your health is another reason to protect your savings from Education inflation. 

Education inflation is rising at 10-12% in India which makes protecting your savings essential to retain your purchasing power in the future. Give your child the future they deserve by keeping up with times and saving in advance.

Consult an expert advisor to get the right plan for you

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