For millennials, securing their children’s education is a paramount financial goal. However, the steep rise in education inflation, hovering around 11-12%, poses a challenge. In contrast to the 6% consumer price inflation, this implies that education costs could potentially double every six to seven years. Let’s explores the insights on planning for education expenses, especially for those considering overseas education for their children.
Planning for the future:
It is important to have proactive financial planning for education. With the current estimated annual cost for an undergraduate program abroad reaching around $100,000, including tuition, accommodation, and living expenses, there is a need for early planning. The parents are advised to start the planning process as early as possible, ideally when the child is one year old or even younger.
Early initiatives for robust finances:
Initiating the planning process early allows families to distribute the financial burden effectively. By creating a financial cushion in advance, they can better navigate the rising costs of education.
Diverse investment options:
Various investment options, such as endowment plans and Unit Linked Insurance Plans (ULIPs), which provide long-term savings coupled with insurance coverage need to be explored. Mutual funds offer a flexible and straightforward route for parents seeking market-based investments with the potential for higher returns over the long term.
Government-backed stability:
For those inclined towards stable and secure investment avenues, government-backed schemes like the Public Provident Fund (PPF) and Sukanya Samridhi Yojana (SSY) provide attractive options. These schemes offer fixed-income avenues, ensuring a steady and reliable approach to funding a child’s education.
As the costs of education continue to rise, millennials are presented with the challenge of planning effectively to secure their children’s academic future. By adopting a proactive and diversified approach, millennials can navigate the financial landscape and ensure a robust financial foundation for their children’s education.
