Nelson Mandela said, “Education is the most powerful weapon which you can use to change the world.”  Hence, as parents, we believe that education is the most important asset we can provide our children. Our foremost goal becomes to provide a holistic development to our children. This not only includes education from reputed educational institutions but extracurricular activities like sports, music, art, etc. These activities also come with a hefty price if you want a reputable coach/trainer. Basically, you should have started saving yesterday to be able provide these options to your child. Here are a few tips to guide you through financial planning.

▪Start Saving Early – Planning for your child’s future is a long term plan, start saving it as soon as your child is born. The effect of compounding will help you achieve this goal even with small contributions at regular intervals.

▪Plan for Inflation – The fees at a college wouldn’t be the same say 10 years from now, it would have increased and you will have to keep that in mind while planning for higher education. Factor in inflation and save accordingly, access the future cost of education.

▪Budget – Having a monthly budget helps you to keep a tab on your earnings, expenses and savings. It will help you to optimise your savings and spending monthly. There could be unnecessary expenditure that you may not even remember, like a monthly subscription to an e-magazine which is going as an ESC and you are not even aware of it! It may feel like a trivial expense but money saved is money earned.

▪Long Term and Short Term Goals – List down the long term goals like higher education, marriage, and specialization depending on what your child is interested in. But there will be short term goals too, like art classes, sports, musical classes, etc, these also have to be accounted for and included in your financial planning.

▪Invest Wisely – Just saving alone will not help you reach your goal, the saving has to be invested smartly to grow and that will help you reach your goal. There is an array of investment options available in the market, choose them based on your risk appetite, need and time horizon.

▪Evaluate regularly – There are two reasons to evaluate at frequent intervals –

oGoals can keep changing as your child grows up, their interest may change with time and you may need to adjust your plan accordingly.

oThe market keeps fluctuating according to the performance of the companies, economic upheavals and conditions. So what may have been a good investment yesterday, today it may need to be reassessed. You will have to have an exit strategy for these situations so that you don’t burn your fingers as well as flexibility to change plans based on your situational overview.

▪Educate your children – As a parent, it is our responsibility to make our children financially literate. Children best learn by seeing and observing and when they watch you save and make a sound investment, which is what they will learn too. Having financial discipline from a young age will make them financially independent adults. This is one of the most important legacies that you can pass along to your children. Teach them to save and invest before spending.