If you have just become a parent, your immediate concerns will revolve around getting the best care for your baby in their infancy. You will think about comfortable baby wear, good quality diapers, and perhaps even consider keeping a nanny to watch over your little one. There is one more thing that you need to add to your ‘to-do’ list – start saving up for your child’s higher education.
It might seem a bit too early to think about college expenses when your child is just a toddler, but the years do fly by in a blink of eyes. In no time at all, your baby will go from snuggling in your arms to heading off confidently to their first day in school. And suddenly, as they are filling up college admission forms, you will wonder how the time went past so quickly. Bear in mind that inflation will make higher education much costly in the near future. You will thus require a foolproof plan to ensure that your child can afford their best choice of institution.
To guide you, we have listed 5 workable tips to help you save funds for your child’s higher studies.
Calculate the costs
The first step of saving up for your child’s higher studies is know how much you need to set aside. When doing this calculation, do factor in all the costs that would be involved in pursuing higher studies in a foreign country. It is always better to over plan and save more than end up with less. You would need to consider for tuition fees, hostel charges, travel expenses, study materials, and field trips. Make sure to take inflation into account.
Protect your family with insurance
Life can be unpredictable and suddenly make things go awry. You need to secure your family with adequate protection-based insurance products. This will ensure that your loved ones are provided for if you suddenly pass on or are diagnosed with a health condition, such as terminal illness, critical illness or total/permanent disability. Make sure to invest in life insurance and personal accident insurance. If you are paying a loan on your home, do opt in for mortgage insurance as well.
Consider endowment plans
Endowment plans are one of the best ways by which you can save up for your child’s tuition fees. Endowments allow you to choose a policy term that coincides with a specific savings goal you have. For instance, if your child will head to university 20 years from now, you can opt in for an endowment plan that has a term of 20 years. Endowments promise capital guaranteed on policy maturity. Additionally, if you happen to pass on, your child will receive a death benefit payout.
Create an emergency savings fund
The good old-fashioned method of keeping aside a bit of money every month should never be disregarded when creating a savings plan. Afterall, this is the one method that has stood the test of time. Keep aside a portion of your income each month to create a corpus of funds that you can turn to in your need. These funds should ideally be liquid and easily accessible. Do remember that setting aside funds in an emergency savings account should be part of a bigger plan towards affording your child’s higher studies; it’s should not be the only plan.
Try out ILPs to balance out your investments
Finally, consider adding investment-linked policies (ILPs) to your insurance portfolio. ILPs offer you the potential of earning exponentially compared to other forms of investment-based insurance. The returns are based on the performance of the sub-funds selected in your plan. You can consider getting professional help to select your sub-funds well. Furthermore, ILPs can also double up by offering your coverage through their insurance component.
We hope these tips will help you achieve your financial goals when saving up for your child’s higher education. Do discuss with your spouse and make a good decision. All the best!