The 5 steps to accomplish your child’s education goals

 

Education is the first thing that comes in the mind of every young parent today when they think of their children. To provide the best education possible is the main goal and priority of every parent. The question is how to achieve this goal with the exponentially soaring educational expenses. Whatever be your income, with a proper plan, consistent execution and right choice of investments, there is no way that you cannot reach your financial goals, including your child’s education.

Here are the five basic steps that will help you to easily achieve your child’s education goals.

Have a realistic goal

The first thing in any financial plan is to have a definitive goal. Know your needs and understand them to define your goal. You can dream big, but you should have realistic goals so that you can achieve them. When it comes to your children’s education the goals are simple; the primary goal is to support their graduation and the secondary goal is to support their post-graduation. Make sure to plan for it in such a way as to not compromise on your other financial goals.

Fix the time limit

Now that you know your goals, you will also know how long you have to achieve that goal. Early start is always the best. So, say you start planning and investing for your child’s graduation as soon as your baby is born, then you have about 19-20 years for his / her graduation and for post-graduation you have about 22-23 years. Knowing the timeline is very important when you are investing for any financial goal.

 

 

Calculate the required goal amount

Research what is the current education fee for the graduation that you wish for your child. Accordingly, calculate the amount that would be required after 19-20 years including 5% inflation for that final amount. This is required to know the minimum monthly / yearly investment that you need to make, spread over these years.

Choose the easy and best option for investment

The easy and best option for any kind of financial investment is to keep it regular and small. Instead of aiming to invest big amounts in one shot, it is always best to save comparatively smaller amounts, regularly and consistently spread over the given time period. One easy option for it is to invest through SIP or systematic investment plan. You can choose to do it monthly or quarterly. In this way, you will not feel the burden of keeping aside a big amount and you will also be consistent.

You can also do lump sum investment as and when you get some bulk income in the form of bonus or increment.

Pick the right investment means

The last step is to pick the right SIP or stock or bonds or FDs which will suit your requirement depending on the time frame as well as your risk-taking capacity. Simply put, the longer time you have to achieve your goal, you can choose to take higher risks and the shorter time you have you should opt for a safer approach. Even when you have a long-term goal, it is good to keep investing systematically in mutual funds and then move that accumulated amount to safe options such as bank fixed deposits or to debt funds during the last two years of the goal.