Ultimate Guide: Top 5 Factors to consider while saving for your child’s education abroad
Funding is the most important yet most neglected aspect of sending your child abroad for higher studies. A majority of Indian parents do not realise how expensive it is to finance a foreign education and how hard it is to save for your child’s education abroad.
This is because certain factors like overlook when it comes to financial planning. Let’s dive in and understand the factors that directly affect your chances of saving for your child’s education abroad-
Education inflation directly affects the cost of education. It affects your child’s tuition fees, application fees, accommodation as well as the cost of books and study supplies.
In fact, the rate of education inflation far exceeds the rate of household inflation today; parents do not factor in inflation while planning or saving for their child’s education.
They make the mistake of preparing for the prevailing tuition costs and living expenses rather than the future costs when their child will actually go off to college.
To ensure inflation does not eat your savings, you can calculate the future cost of education (that is when your child goes off to college) and start saving for that cost in place of the current tuition fees. Use a calculator that takes into account the study destination, your child’s desired courses, accommodation fees and living expenses to know how much you need to save in order to help your child excel in their dream university.
Not Starting Sooner
Another factor that parents overlook when starting an education fund for their child’s education is time. Starting early is the best way to maximise gains and returns on your investments and savings.
The ideal time to start planning for your little one’s education is before they are born. Parents who start early can reap the benefits of long-term investments and the magic of compounding.
Both Parents Can Save
By ensuring you and your partner contributes towards the education corpus, you can achieve this goal faster. Often, one parent takes the responsibility or ownership of saving for their child’s education but both the parents contributing to this humongous feat can be achieved far more quickly.
This method of saving can help you save more and even get to the goal before time. It is a great way to ensure consistency and discipline.
Putting on your eggs in one basket
A rookie mistake that many Indian parents make is that they invest in only traditional forms of investment such as FDs, gold and real estate and undermine the value of new-age investments like Mutual funds, ETFs, stocks, bonds, etc.
This is a huge disadvantage because you miss out on the opportunity to save against inflation. New-age investments offer a unique opportunity and hedge against inflationary forces which means by investing with them, you get to beat inflation.
The latter investments are also more flexible and offer liquidity. There is also an opportunity to save in dollars and not rupees with new-age investments through ETFs.
Not choosing the right platform to save
Saving with the right partner or financial expert is extremely important. If you pick the right guide, you can get to your goal faster and more efficiently.
Though there are many platforms that help you invest, there is a high chance they do not understand your goals as parents who wish to save for their child’s foreign education and may not offer the guidance or financial expertise you need to build a strong and diverse education corpus that beats inflation.
So do your research, and figure out the best platform that understands your needs and preferences before starting a savings fund for your child’s future.
These factors can help you determine how to save when to save and how much to save for your child’s education abroad. The right guidance can do wonders for your child’s future and dreams!