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 a child/ children. To provide the best education possible seems to be 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 the proper plan, consistent execution and the right choice of investments, there is no way that you cannot reach your financial goals, which includes your child’s education.
Here are the five basic steps that will help you to easily achieve your child’s education goals or any other financial goal.
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 a realistic goal so that you can achieve them. When it comes to your child’s education the goal is 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. The earlier you 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 16-17 years and for his/ her post-graduation you have about 20-21 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 16-17 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 16-17 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 do comparatively smaller amount, 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.
If you follow these 5 basic steps you will surely accomplish your child’s education goals. You can consult with your financial advisor before you start investing to pick the funds that will suit you the best.