What Financial Experts Say Most Parents Miss While Planning for Kid's Education

What Financial Experts Say Most Parents Miss While Planning for Kid's Education

Posted on 01 Jun 2023

Every parent wants to give children the best that life can offer. The first thing on any parent’s mind is the cost of education. In order to ensure that children get the ideal opportunities in terms of education, parents will spare no expense, but most do not plan their financial futures well enough. The way to go about having enough capital is not to simply save for your child’s future education, but to let savings grow in alignment with your goals. Investment products are a dime a dozen and finding some to build capital is not challenging if you set your plans straight.

The Cost of Living

It is hard for parents not to go astray when it comes to spending for their children. It is also a challenge for most families to live on a budget and get their financial priorities right. However, fund shortages are all too common in households, and parents find it a challenge, some living almost day to day without a second thought about saving. Granted, the cost of living is high these days, and the cost of education is still higher.

Nonetheless, in the majority of cases, parents make the common error of distinguishing between needs and desires. There is not just a single error that parents make while planning a child’s education, but a few crucial ones. These mistakes often cost parents a lot in terms of missing out on the best educational opportunities for children in the future. As a good education gets dearer, especially higher-level education, parents find it difficult to stretch enough to pay for it, unless they plan much in advance.

The Mistake of Having No Plan

Higher education in India is getting very expensive with good institutes charging high fees. Top notch schools like IIMs can charge more than Rs. 20 Lakh in total fees. The stay may be additional if your child has to live off campus (or even within the school), and then there’s extra to spend on materials like books, laptops and other equipment. The cost of higher education abroad is even more than within India, and you would have to invest very wisely for a long duration to meet such expenses. The most common mistake is not to have a concrete plan for your child’s educational future.

In many cases, parents do think about education and the costs to be borne, but strategies are not well thought out. Hence, investing may be done early, but parents may find there is not enough collected to meet educational expenses. Having clear goals and attempting to execute them effectively includes:

  • The selection of a school early
  • The selection of the option to study within India or abroad while your child is in school
  • Saving and investing in multiple investments, not just one, in a separate education portfolio for your child
  • Putting off needless expenses and aiming for prioritised ones

The Mistake of Overlooking Inflation

Today, child education in some of the best schools in India is a dream for a lot of Indian parents. The best private schools abroad are also expensive and if you want a “good” school, you must pay. The best way to go about organising your expenses is to make a budget. You may have to compromise on expensive holidays to invest that money in a child plan and build a corpus for future education. In case higher education abroad is on your mind, it is better to settle on a school education, giving the child a decent start, and keeping money aside for higher education. Costs of education are high currently, and this is due to the influence of inflation. What most parents miss while planning the future education of their child is to account for future inflation.

Parents may well be able to afford a child’s education in the current scenario, but can they do so ten years from now? With this in view, parents must choose a variety of plans and schemes to invest in, giving children the best, or at least, a start to their education, abroad or within the home country.

The Mistake of Being Late and Overlooking Eventualities

Starting to invest for the future, a child’s or the family’s should be done as early as possible. There is no scarcity of investment options to suit every individual and goal, so there is no excuse not to start early. The longer you stay invested, the more you can gain. When you do start, think of multiple investment avenues and products. Some are geared to investing in a child’s education (like a child plan) exclusively, but this may likely not accumulate enough for child's education. You must opt for a range of investments like insurance blended with investment plans, fixed income channels and other investments in equity and commodities (like gold, for instance).

You may do all the planning for a child’s education, given your income, substantial increases in income and growth from investment, along with inflation considerations. However, have you thought about the fact of any other unpredictable events that could eat into your corpus? For instance, in the event of your unfortunate demise, your child’s education plan may suffer. Therefore, getting a good life insurance plan for yourself is important. You can choose between pure term plans or other plans to ensure that your child’s education continues according to plan if you are not around to finance it.

Choose Wisely

When you select investment products to ensure the efficacy of meeting the costs of your child’s education, it is imperative to have plans that give you liquidity. You may opt for a child plan with a maturity benefit, but you should be assured of getting the maturity sum when your child needs it. Additionally, you may believe that taking a loan is the answer to fund a child’s education, but remember, loan repayment has to be made, and if, at any stage you are unemployed, this will be a challenge to encounter. It is crucial to note that an education fund must be set aside to meet educational costs, and you should have enough other investments to meet different financial goals.


  1. https://m.economictimes.com/wealth/plan/7-mistakes-to-avoid-while-saving-investing-for-your-child/amp_articleshow/90166094.cms
  2. https://www.financialexpress.com/money/5-common-mistakes-to-avoid-while-investing-for-your-children/2345461/lite/
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