How to save for Education
As we all know the cost of private education increased day by day children are the most important asset one can have. One may not amass a fortune in his lifetime, but deep relationships make life more satisfying. After all, various options like scholarships, education loans are available. Many are serious about saving for education but are not aware of where to start.
Every parent aspires to support their children’s education. A majority of parents find it more fulfilling to support their children’s education. People like to contribute to whatever they feel like doing good for society. To them, societal value seems more important than monetary value.
The Rising Cost Of Education
The education costs are rising at 10% per annum. Besides fee structure, there are other costs like books, coaching, transportation, etc, which need to be considered. This cost increases significantly if one wants to pursue studies abroad.
Education Loan – A Viable Option?
The option of an education loan is available. Section 80E of the Income Tax Act exempts interest paid on loan taken for education purposes. This makes sense even for an individual in the high-income bracket. Many times a child may require a graduate degree before embarking on a career Path. In such a scenario, it pays to calculate the total cost of education beforehand. In case of confusion, seek the help of a financial adviser for financial planning. They will help you formulate a financial plan that can withstand the impact of inflation too.
With prudent planning, it is possible to make informed decisions. For example, a person having a son aged 2 years need to plan education expense beforehand. A small saving every month can help him achieve education goals. The only condition is to follow an investment plan with determination.
While delaying retirement to fund education is admirable, is it advisable? Logically, this may not be a wise decision. Ideally, a person should try to balance retirement savings and education planning. Before making a decision, one should consider all options carefully including the alternatives available.
One knows about the timing of graduation but this cannot be said about retirement. An injury can force a person to take early retirement. Lack of savings can cause discomfort to parents as well as children at a later age. The option of scholarships or financial aid is available if there is a shortfall; it has to met by a student or a parent. In such a scenario a person has no option but to work longer or sacrifice some of his goals.
If you want to be on sound financial footing it is important to know the fundamentals. For many, education planning is about all or nothing. This is a wrong assumption. Absolute clarity is a must for stress-free planning. It is important to check and revise education goals. Planning is essential even if you manage to secure a scholarship. In a worst-case scenario, if you have saved enough, you can access those funds in case your child needs help in higher education. Besides, you do not want your children to worry about you in old age. Many do not feel comfortable at the idea of becoming a burden to their children.
How to save for Education
To sum it up it good to pay for children’s education, but even more important is to educate your child to become financially responsible. Good money skills are equally important and help your child to avoid debt-trap later.