After two months of summer holidays, kids are now back to school. New year, new class, new teacher, new syllabus, new bench, while your kid is trying to cope with the new academic year. Are you trying to cope with their school fees? We all know the cost of living, fuel prices and prices of all goods and services are increasing, by the day. So are education prices. Paying school fees is becoming a challenge with increasing prices. As a parent, you would want to give only the best for your kid. And, education is the primary and most important thing that would shape their career and make them responsible citizens. Therefore, no parent would have academic expense as their last priority.
Cost of education in India is witnessing a fast paced increase. Be it primary, secondary, higher education or college fees, it is getting difficult for parents to meet the growing academic fees structure and other education-related expenses. Rough estimates suggest that on an annual basis education inflation is about 10-12%. Are you considering this while planning for your child’s education?
Most parents start saving for college, but don’t you think it’s important to plan and save for schooling as well? Education has become the costliest affair while raising a child. Hence planning for it from the beginning is important. Be it a CBSE, ICSE, IB or state board school, they are becoming costly by the year. Doesn’t mean you compromise.
Plan for Every Academic Year
The best you can do is plan for every year and manage your funds in a better way. Let’s say you have a newborn and he/she will be joining the school in the next 2.5-3 years. Saving for each year of schooling is the best strategy you can follow. You need to invest in a way that your saving is earning returns as much as that of the education inflation, if not more. For all your long term investments equities are the right choice. A long term investment can be anything above 5 years.
Type of School Fees
Different schools have different fee structure. It is either full payment at the beginning of the academic year or paying during each term in the academic year.
- One-Time Payment – This might be a little stressful while paying, but through the year you wouldn’t have to worry about fee payments. As you would be needing a good lump sum amount every year, your investment should be such that you do not have any exit load while withdrawing. This is necessary because you wouldn’t want to lose any amount due to penalties.
- Term-Wise Payment – This is the most convenient way of making school fees payments. You wouldn’t have the worry to mobilize large sums at one time. Have a better strategy for this. You can always invest to withdraw a lump sum amount or do partial withdrawals when you have to take the term payments. If you choose to make a lump sum withdrawal, you can always invest the remaining amount in a liquid fund, rather than holding them in your savings bank account. Investments for less than one year, liquid funds are the best, as they earn higher returns than a savings bank account. These funds are less risky as well. Also, liquid funds do not have any exit load. Therefore, you can either choose to do a partial withdrawal of your investments or withdraw in full and invest in liquid funds for a short period.
Other Academic Expenses
Each academic year doesn’t end with just paying the school fees. You need to consider additional costs such as books, tuitions – extra help, sports, extracurriculars, etc. Schooling doesn’t end with just studying. Your kid needs to enjoy everything. Be is sports or pursuing a hobby or learning some art. These aren’t free. Coaching centers are gaining importance because everyone wants their child to be the topper of the class. Additional help will always be useful for your kid. They can clear your child’s doubts or explain topics in depth.
Pursuing their interest – sports or art, whatever, its important and it will help them grow intellectually as well. Encourage your child to pursue anything that interests them in addition to academics. This will help them from relaxing school pressure and will give them mental peace. These activities will not only help them learn something new but will also help them make new friends and learn more. For example, in a team sport, your child will learn team management, time management, delegation, conflict management, etc. in a better way than they can ever learn from a book. These hobbies will teach them life lessons through practical exposure. Don’t let your child miss out on it because of a cash crunch. Plan for these and invest such that you are helping your child’s development.
Thankfully, for college expenses, a part or full fees can be funded through an education loan. However, doesn’t mean you do not save for your child’s college fees. Education loan should only be to support you in case you fall short of funds while paying for college. It should be taken only to bridge the gap between your savings and college fees. Since college is a long term goal, invest in Equity Mutual Funds. Though these are risky, a long term horizon would help you earn higher returns. Invest regularly through SIPs to average out your risk.
Education is a goal that you cannot compromise. To give the best for your kid you need to invest in the best funds. At Upwardly, you’ll be able to make your own goals and invest in the best funds that would help you realize your goals. You can even talk to an advisor who’ll help you plan your investments. Education is a long term goal, saving for each academic year should be your priority, rather than liquidating other investments to pay the fees.