Most parents start thinking about their education with the birth of children and want to get them educated from a famous college when their children grow up. However, financial problems also arise in front of parents. Every parent has a natural desire to provide better schooling, better opportunities in life to their children. Most people believe that education is everything and they want to send their children to study in top institutions. Parents spend a large part of their savings for their education. In the era of rising inflation, better education is becoming increasingly expensive and in such a situation, parents should plan as soon as possible so that a large amount can be arranged till the children go to college.
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Make arrangements like this for the education of children
- Financial Planning: The goal of raising funds for the education of children can be achieved through financial planning. If you already have children, make a plan as soon as possible. The sooner you start implementing the financial plan, the better because education is becoming increasingly expensive. People aged 25-40 usually save an average of 11 percent of their income after all expenses, which is much less than the recommended 30 percent. It is not possible for people aged 25-40 years to save more because they have more expenses on life, travel and others, due to which they are not able to save more. In such a situation, financial planning is very important so that expenses can be controlled.
- Start investing as soon as possible: For future planning, it is better to start investing as soon as possible but that is not enough. Apart from starting investment as soon as possible, parents should invest strategically to get better returns. If you have 15-18 years, that is, it may take so long for your child to reach college age, then the return volatility can be negligible for this long period. If you have the ability to take risk, you should invest up to 75 per cent of the investment in equity. By investing more in equity, you will be able to beat expensive education.
Apart from this, whatever is from small to large amount, a SIP should also be started as soon as possible. Your goal cannot be achieved by keeping your money in a wrong scheme or keeping money in the bank. In such a situation, parents should systematically think about investing in mutual funds.
- evacuation plan: The investment process is never permanent. This should be adopted especially when the investment has been made over a long period of time. Five years before reaching its target period, you should invest your money in equity and invest in debt. For this, a systemic approach can be adopted, that instead of shifting the entire amount at once, one should invest in debt with a maturity of 1-3 years.
(Story: Arindam Sengupta, Co-Founder, EduFund)