5 Mistakes to Avoid While Planning For Child’s Education

5 Mistakes to Avoid While Planning For Child’s Education

Every parent wants to give the best education to their children and better than what they had received. Though, you can’t be sure in which direction your child’s interest will develop, you would want to accumulate enough corpus to fund any of your child’s education needs.

Planning for children’s education is a time-sensitive goal. You have a specific number of years during which you have to save enough for the future of your kid. You can’t postpone this goal.

However, as a child education planning is an emotional affair, most of the parents tend to make mistakes which may prove costly to their goal.

Here are some mistakes which should be avoided while planning for your child’s education:

  • Avoiding Inflation

It is required to estimate the total cost of education. It doesn’t only include school or college fees but other related expenses like a hostel, transportation, food, etc.; as well.  

Once you have arrived at the education expenses, it is essential to increase it as per the inflation rate. This is where most of the people make a mistake as they overlook the inflation impact. The amount that looks sufficient today may not be adequate after five or ten years down the line.

Therefore, it is necessary to consider the impact of inflation while making investments, as stated in the next point.  

  • Choosing wrong investment products

It is necessary to understand that you can’t achieve a target whose cost is increasing by more than 10% by investing in a product that only gives 6%-8%. Also, as it is a time-sensitive goal, you can commit a mistake of investing in an illiquid fund like real estate. Having said that, it would be unwise to depend on bank fixed deposits or PPF as a part of your child education plan.

You can invest in mutual funds that let you strike a perfect equilibrium between equity and debt. When your child is small, and time is at your side, you can invest more in equities. If the time is less, invest more in debt funds and secure it from market volatility.

If the goal is near, i.e., money requirement is only a few years away, invest more in debt funds and secure your money from market volatility. Also, with mutual funds, you get an option of switching funds from equity to debt and vice versa.

  • Not buying enough insurance covers for yourself

While securing your child’s future, it is necessary to take steps to secure your life as well. You are planning for your child’s future on the assumption that you will always be there for your child. But what if something unfortunate happens to you? Who would take care of your child’s dreams in your absence?

You can’t secure your child’s future until you have adequate insurance cover. Have sufficient term insurance, personal accident insurance and health cover so that your savings remain intact in case of a mishap. These plans will give financial security to your child’s dreams.

  • Ignoring retirement planning

It is one of the biggest mistakes which most of the people make while planning for their child’s education. Making investments just to secure your child’s future by putting your future at stake is not a right decision.

You should understand that for meeting your child’s education expenses, you can rely on scholarships and loans, but you have to meet retirement expenses from your savings only. Therefore, it is always a right decision to choose retirement as a priority over child’s college expenditure.

  • Thinking beyond textbook knowledge

It is essential to understand that good education is not only about studying in some reputed schools or colleges. In fact, emphasis should also be given on building character, learning to give respect. And, and all this preparation starts from home.

In today’s fast-paced world, it is a tough task to provide the best education to your child. So, you happily admit your kids in so-called ‘hi-tech school’, which is expected to give you everything which you are unable to give.

Doing this doesn’t guarantee a comfortable future for them. By spending time with your kids, playing with them, attending their school’s function, etc.; you can inculcate values in them, which is the best education. By just fretting over the best school and college for your kid and working hard to accomplish those goals, you will end up losing precious moments.

Over to You

Steps which you take ‘Today’ can shape up your child’s ‘Tomorrow’. Children’s education planning is a crucial goal, but it should not be considered in isolation.

Let it become part of your holistic planning. And most importantly, while planning, don’t forget to spend time with your child and create some beautiful moments.

Editorial Team
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