Every parent wants to give the best for their child, including their education. Maximizing the interests and talents of children with the best education is certainly a dream of every parent. Therefore, the cost of children’s education is one thing that you should not be negligent to prepare. Moreover, it is estimated that the cost of education goes up by 20% every year, much bigger than inflation change and salary increase! The following five tips may help you set up funds for best education for your child.
1. Prepare early
Investment takes time to develop. The cost of education is usually a long-term target that takes more than 5 years to achieve. Take into account the duration of time you need to prepare your education fund. The longer time you have the lighter your load. The duration and amount of costs that should be set aside each month is affected by how old your child is today. Hence why it is ideal for child’s education planning begin once you and your partner plan to have a baby. The sooner you start putting money and investing, the better.
2. Plan your child’s education level
Plan your child’s education, for example the type of school you want (public school, private, or overseas), the type of education according to your child’s interests and talents (art school, or medicine, etc.). After that, use the child’s tuition fee calculator you can get on the internet to calculate your estimated future tuition fees.
3. Calculate the amount of investment you need to do
After getting the target cost of education, you can calculate the amount of investment you need to do to reach the target. The type of investment you make, such as education savings, mutual funds, etc. also affects the amount of investment. According to financial planner, Freddy Pieloor, for short-term educational purposes (eg. 5 years), he suggested using conventional education insurance because the calculation of the money is guaranteed. As for the longer term, you can choose the education insurance with the choice of investment instruments in stock. Indeed the funds formed will fluctuate, but in the long run, the yields can be better.
4. Consider the need for life insurance
You also have to think about the worst. What will happen if you or your partner as the breadwinner of the family can no longer afford a family, for example because of illness or death? Prepare protection for your child, so when the worst happens, your child can still live properly and get the best education possible.
5. Do not hesitate to ask for help
Knowledge of financial planning can be obtained from books, internet, financial news, or ask your family or friends who have made an investment. Nowadays it is not so strange to use the services of family financial planners. Not that you are not capable to do it, but there are people who are much more understanding about family finances. Therefore, it would not hurt if you also consult a financial planner to create the best education fund plan for your child.