Life becomes easier and manageable with planning. A very important part of a happy and balanced life is managing your finances well. This responsibility becomes manifold if you have a family to provide for. Prioritising the prior planning of your child’s college education can make your retirement life effortless and stress-free.
Put away savings to preserve wealth. Invest money to generate more wealth. At the end of the day, gaining that fine balance between your savings, investments and spending habits is what will secure a beautiful future for you as well as your family.
Here are some pro tips on how to invest and save for your children’s college education.
1. When To Start?
Timing is everything. The logic is simple – the earlier you start, the more wealth you can generate and accumulate. You may begin as early as the family planning stage itself. Even if you do not have a clear sight of the stream of academics your child might pursue later in life, it does not hurt to put away money.
As your child grows up, they might decide upon what line of academics they want depending on their career goals. Your savings will come in handy in reassuring your child that you are perfectly prepared to back them in realising their dreams as there will already be a considerable amount of funds they can count on.
2. Compartmentalise Your Savings
The habit of saving money regularly is one of the healthiest habits one can inculcate. But mastering the art of saving requires self-regulation and a sense of organisation. Putting away a bulk of money indiscriminately is not the most effective way of saving.
Keep track of your expenses and your income; device upon an amount you can afford to put away as savings. Make a list of all the things you need to save for – emergencies, education, health, housing, and so on. Divide your savings accordingly.
The act of compartmentalising savings can also be effective in regulating your spending habits. You can also inculcate this healthy habit in your child from an early age by encouraging them to save money from their monthly allowances.
3. Consider Different Investment Options
Investing is always an improvement upon saving because investments can generate new wealth. Thus, it is not enough to just put away money as savings; you also need to allocate funds to certain investments that suit your monetary goals.
There are different kinds of investment channels you can opt for. Some of us prefer fixed or recurring deposits while others want to generate more returns and go for mutual funds. Mutual funds can be of different types depending on the factors like the amount of risk, duration, return rates, etc.
The mode of payment can also vary. For example, you can go for a one-time investment or you can choose monthly SIPs. Be well aware of all kinds of investment plans available so that you can choose the best one for yourself.
4. Invest For A Global Education
Your savings and money made from investments will be especially useful when you send your child abroad to pursue a college education. Even if you are not sure about the possibility of global education in the future, it is always advisable to remain prepared for the same.
Simply saving money is not enough. Investing is a better idea and in the case of global education, it can be beneficial to invest in foreign stocks. This is because the value of the Indian currency is forecasted to fall in comparison to other stable currencies in the world.
This means that the cost of living and studying abroad will be way higher than the cost of living and studying in a new city within India. Once you set your financial goals, find out about investment schemes with international equity funds from countries like the US, so that you can make money in a more stable currency.
There can be several investment goals relating to different parts of your life like yourself, your spouse, relatives, housing and accommodation, health, gadgets, and emergencies. Mixing these up will only cause chaos and distress. Hence, it is important to think separately about saving for your children’s college education and indulge in smart investments.