Planning for a child’s education is an important financial goal in a person’s life, which goes along with other important targets like child’s marriage and your retirement. As a parent, it is natural for you to seek the best for your child. But remember the best is always expensive. Hence, planning for child’s education in advance assumes great significance in financial planning, as it is concerned with your child’s future. Let’s look at a few important things to consider while you plan for your child’s education.
First things, you need to seriously start thinking about all the costs involved in schooling if you are going to understand how much money you will need. This may be worsening by the number of children you have or are planning to have.
Plan the place and time of education: Children today are smart enough to decide the type of education they want. However, as a parent, you must plan your child’s future well in advance. One must decide if he wants his child to go abroad for his education or not. Also decide if you want to plan for his graduation or post-graduation. If you wish to send your child abroad for graduation as well as post-graduation, you should plan for both, as the cost can be pretty expensive. Determining these factors is very important for your next step of planning.
Cost of funding child’s education: This is another variable which you must try and estimate with reasonable accuracy. After deciding where and when you would want to plan your child’s education, you should determine how much it is going to cost you in present day term. Although this step is pretty simple, difficult part would be to estimate what it is going to cost you when your child is ready for his graduation/post-graduation. Remember that predicting inflation in school fees is much more difficult than predicting inflation for other expenses. This is because schools generally increase fees in bulk almost every year, making average annual inflation numbers much higher than normal. Study historical trends and take an average annual inflation, more on the conservative side.
Obviously the largest cost is going to be school fees and this is going to be dependent on private vs. public school.
Private school fees vary tremendously and they do continue to rise each year, they also get more costly as your child ages (higher costs for higher ages). So Year 12 school fees are going to cost more than Year 5 school fees.
Most of the private school fees are now increasing annually. There are also enrolment and administration fees which need to be added. If you put your child’s name down at multiple schools it is going to cost you a couple of money, to have the privilege so be cautious that this money isn’t refundable in many cases. There may also be extra fees which may or may not be compulsory for parents associations (PTA), I mean, Parent Teacher Association, building funds, library funds and so on.
Other significant costs involved in education are uniforms, bag, sucks, sandal, text-books which are going to be needed to be constantly replaced as your child grows. Remember there are second hand shops usually available for your children school material. Textbooks are another issue, plus the stationary, laptops, sporting gear, excursions and don’t forget extracurricular activities such as music lessons, and so on
Finally, You can apply this inflation number on present day costs and estimate how much it will cost in that particular year of study. Apart from school fees, you must also factor in other expenses like food, accommodation and other expenses. Estimate your total cash outflow and plan accordingly.
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