Financial Tips Every Parent Should Follow to Plan Their Child’s Education

Financial Tips Every Parent Should Follow to Plan Their Child’s Education

Financial Tips for Child's Education

Being a parent is not an easy task. There are simply too many things to handle at once. You most likely spend a significant amount of time worrying about your children’s health, homework, and social skills. Then there’s the concern about their future. And you don’t want a lack of funds to impede them from reaching their objectives.

A Child Education Plan is a methodical approach to planning the course of your investments in relation to the fund requirements for your child’s higher education. It is now a requirement if you want to provide your child with a great future. Parents need to learn exactly how they will pay for their little bundle of joy’s school journey, from early childhood care to college.

Child education plan in India is an excellent tool to invest in for securing a child’s future because they provide the dual benefits of providing returns on investment as well as acting as an insurance cover that can come in handy if the parents are no longer around. When investing for a child’s education, it is important to evaluate all of the options on the market before choosing the best option for your child.
Depending on the amount of money required and the time frame available, you can invest in a lump sum or in methodical instalments, whatever best meets your needs and lifestyle.

Financial Tips Every Parent Should Follow to Plan Their Child’s Education

Consider Your Budget

Determine the amount you need to save each month and make sure you accomplish your monthly goal. Education can be costly, so keep your budget in mind when arranging your child’s education. Public schools are often the least expensive alternative, although private schools might be more expensive.

As a result, it is critical to conduct research and analyse the expenses of various solutions before making a decision. First, you must identify your child’s educational objectives. A goal should have three components: a horizon, a target quantity, and it should be feasible.

Start Investing As Early As Possible

The earlier you begin, the better. Because of the power of compounding, the desired corpus can be attained by investing in lesser quantities.
You can earn money on your Child Education Plan via the power of compounding, which grows over time. The longer you retain, the bigger the amount because interest is paid on the total value of your investments rather than on the purchase price.

It is preferable if you have a strategy for what your plan covers for education fees and which ones are dependent on how much money you have saved over the course of your child’s life. To maximise the potential of compounding, it is always best to begin saving and investing as soon as possible.

Investing in Unit-linked Insurance Plans

A lump sum payout is made under the child unit-linked insurance plan only after the policy period expires. A ULIP is a long-term investment vehicle combining insurance and money creation to protect a child’s academic future. A portion of the premium is used to secure life insurance, while the remaining is invested in either equity funds or the debt market.

A ULIP provides both insurance and investing options. The amount you pay each year to keep your plan active is divided in half. One portion is used to pay for life insurance, while the remainder is invested in a variety of funds. Because you can invest in equities, you may be concerned about how a turbulent market will affect your wealth growth.

PPF for the Child’s Future

PPF is a 15-year investment plan that allows for tax-free investments. Consider opening a Public Provident Fund (PPF) account in your child’s name to invest in PPF for your child education plan in India. PPF allows you to withdraw money in part after six years if you need it.

The PPF programme was created with the goal of mobilising small savings by providing an investment with decent returns as well as income tax benefits. PPF investments are considered safe since they are insured by the federal government. However, these agencies have the authority to attach the relevant accounts in order to recoup their tax debts.

Always Keep A Long-Term Investment Option

Investors’ financial objectives may differ depending on their needs. There are numerous investing choices available, including gift funds and loan funds. If you want to invest in mutual funds or even directly in shares, you must commit to a longer time frame. Another investing option with a lock-in term is children’s gifts. It enables parents to stay involved for extended periods of time and get the benefits of compounding power.

To evaluate this, consider your goal, the time frame available to attain it, and your risk tolerance. If your goal is short term (less than 3 years), you can look for investment options such as Debt Mutual Funds, FDs, RDs, and so on; if your goal is long term (more than 3 years), you can look for equity mutual funds, equity ETFs, gold bonds and mutual funds, and so on!

You can invest in equity funds to produce long-term gains that outperform inflation. Based on the options selected, you can calculate a projected rate of return. Diversify your investments to always manage risks when investing!

Do Not Put All Your Eggs In One Basket

There is no single solution to this issue because the asset type changes from person to person. However, imagine you have a longer investment or saving horizon. In that situation, you can invest in equities mutual funds, which can provide annualised returns of more than 13% over a longer time horizon.

Some investments will perform better than others, and each investment will have a different level of risk. You’ll need to rebalance your portfolio to ensure that it always reflects your risk, which is determined by criteria such as time horizon, income, expenses, dependents, and so on. You may need to reallocate your investments to a new asset class where you believe the returns will be appropriate and in line with your risk tolerance.

However, if you have many years to reach your goal, hybrid mutual funds (a blend of equity and debt mutual funds) may be advantageous.

Examine Your Investments

Examine your assets on a frequent basis to ensure that they are in line with your financial goals and that you are receiving the best potential returns. However, the market is not as promising as we might imagine.

Consider whether you have the chance to refresh your portfolio when you detect yourself veering off course.

By following these suggestions, you may ensure that you have enough money saved to fund your child education plan and provide them with the greatest potential future.


It is impossible to overestimate the significance of educational planning in all aspects. It has a tremendous impact not only on the prospects of our children, but also on the future of our nation and socioeconomic growth. To excel, we must plan ahead of time and guarantee that our systems are effective.

As an investor, you want your portfolio to balance your risk tolerance while still producing adequate returns to accomplish your goals. However, the market is not as rosy as we might think. Consider whether you have the chance to refresh your portfolio when you detect yourself veering off course.

Finally, remember that you can always talk to your financial advisor about other strategies to get back on track and actively work towards your goals.

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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