As a parent, one of the most important investments you can make is in your child’s education. An education plan can help you ensure your children have access to quality learning opportunities to prepare them for future success. Planning can help you ease the financial burden of higher education. This article will help you explore the importance of child education plans in detail.
Why Start Planning Early?
Ideally, one should start a child education plan as soon as the child is born. However, depending on the specific conditions in life, one should start as early as possible. Here are a few key reasons to begin the child education plan early:
- Costs Are Increasing: College tuition has risen faster than the inflation rate. Getting a head start on savings can help one hedge against rising costs.
- Time Is on Your Side: Starting early gives your investments more time to grow through compound interest, which can make a big difference over the years.
- More Flexibility: The earlier you start saving, the more flexibility you may have regarding college options for your children. A robust child education plan can provide more choices.
Set a Goal and Contribute Regularly
To select a child education plan, you should set a goal of accumulated savings based on your child’s age and expected expenses. After choosing the plan, it is essential to contribute regularly to ensure that your savings stay on track. Even modest but consistent contributions can add up over time. For example, investing Rs. 5,000 monthly at an average 8% return could grow to around Rs. 16 lakhs in 15 years.
Explore Employer Benefits and Tax Credits
Many employers offer child education plan deduction options and may even offer matching contributions up to a certain amount. Additionally, top financial institutions in India offer annual tax credits and deductions related to education expenses. These can provide extra help to boost your child’s education fund. For example, tax deductions under Section 80C of the Income Tax Act can help you reduce the cost of saving for your child’s education.
Start Now for Peace of Mind Later
While paying for college may seem far off when your child is still young, those costs will be here before you know it. Starting an education savings plan can help provide peace of mind later, knowing you’ve proactively prepared for major upcoming expenses.
Other Education Savings Avenues
Some other options you can consider to save for future education expenses of your children include the following:
Sukanya Samriddhi Yojana: This government-backed scheme offers high returns specifically for girl children’s education to cover college costs.
Public Provident Fund: While not exclusively for education, PPF accounts enjoy tax benefits. You can funds utilise these funds to cover the education of your children.
Mutual Funds: Various mutual fund plans in India allow long-term savings to cover education costs. These funds can offer exciting returns on your investment.
Final Glimpse
Even if you can only contribute small amounts towards your child’s education plan, develop the habit of regularly setting aside funds. Before you know it, you’ll have a nice fund established that can be used to pay for a college education and help set your child up for a bright future.
