All parents face a common challenge pertaining to investment decisions, i.e., how to balance their child’s educational needs and financial goals. As a parent, you want your child to go to a good school and then a premiere college or university for world-class education, which needs a good amount of financial planning to continuously meet expenses on that front. Balancing a child’s education and long-term financial planning requires strategic planning.
In present times, there are multiple investment options available for parents to meet both objectives – funding education and achieving long-term financial goals. As a parent, you can allocate resources effectively and explore diverse investment tools to ensure that you save adequately to fund your child’s education without compromising on long-term financial goals.
Investment experts are of the view that as a parent, you can overcome the complexities of financial planning by following certain simple steps like setting up a dedicated education savings account for your child, exploring investment options for kids tailored to meet their educational expenses at a later stage, and reassessing financial goals. In simple terms, you need to craft prudent financial planning and have a clear understanding of priorities for your child.
Tushar Bopche, Co Founder and Head of Strategy, Invest4Edu, talks about various aspects of child’s educational planning and long-term financial strategies. Bopche suggests that parents should always have a proper strategy and planning when it comes to deciding about future planning of their kids in terms of education and financial goals.
“Parents want to give the best of everything to their child but they do not have a clear path, defined journey, and set goals. They do start saving and investments but many of them fail to align investments with the goals,” says Bopche, who co-founded Invest4Edu, a platform offering education planning, saving and investment services.
Bopche shares following 7 mantras for parents to balance their child’s educational needs and other financial goals:
- Understand your child’s strengths and set their aspirations according to them.
- Start early even if you have to start small. Remember, your savings depend on your earnings. By focussing on the goal from the start you can invest with focus and achieve all the goals when the time comes.
- Always have financial protection. Build an emergency fund and have term and health insurance for the family.
- Manage your budget. Save first, spend later.
- Diversify your investments to have a consistent return and do not let your plans be affected by short-term market volatility.
- Review your investment at every phase of the journey. Your needs will be different when your child is five years old and they will be different when the child turns 18.
- Be disciplined. You know what you have to do. Just keep on doing it diligently.
Talking about the latest trends and investment strategies that parents should follow for their child’s future, he said long-term goal-based investment is still not common.
“Parents need to start investing from the get go. When we connect with parents, they say it is too early to set goals and plan. This is quite common to think that you have time. We tell them that education inflation is very high compared to normal inflation, and it is not going to go down in the foreseeable future,” he emphasizes.
Funds are required to complete the education journey parents want their child to go on and arranging funds at the last minute is what disrupts people’s other goals, he said, adding that people do save but they don’t invest based on goals. “They need to tag their investment with the goal, and regularly review it,” Bopche said.
