Planning for your child's higher education is one of the primary responsibilities that you have. However, with growing expenses of education, the earlier you plan for it, the better. It is always advisable to save for your child's education rather than opting for a loan. Read on to know how to plan for your child’s education-
Decide your time horizon
It is probably the most crucial step when planning for your child's education. You need to estimate the time left before your child starts applying for colleges or universities. It is advisable to start saving for your child's education as early as possible. Starting early does not only give you a head start and a chance of better returns, but it can also mitigate the effects of a market slowdown in the long run.
Estimate the cost of education
Estimating the cost of education is equally important when opting for an education plan for your child's future. There are various factors on which this depends-
Consider your current debts and liabilities
You need to take into account assets and liabilities when planning to raise a corpus for your child's education. You can turn to equity or debt funds or a mixed portfolio of both or a PPF or a child education plan even for planning for your child's future education. If you have enough time and do not have significant liabilities, you can rely more on equity funds to fetch you the desired returns. However, in case you want to play it safe, you can include more debt instruments in your portfolio. Another tried and tested way of generating funds are Child education plans. If you stay invested long enough, these plans are known to generate excellent returns.
Start saving
Once you have an estimated amount, you need to start saving. The best way to go about doing it is by saving some amount monthly. If you are investing in the market, opt for a SIP that automatically invests a part of your salary every month in a mutual fund. Alternatively, you can opt for a child plan in which you will have to pay monthly premiums. You can choose to have the same premium or can opt for increasing premiums to increase the probability of generating the target amount earlier. This can save you from having to go for the expensive student loans.