Cost of Child Education

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We always dream to give best education to our child but do we really think about growing cost of child education? We want a child to become doctor or engineer but do we really plan for this? As per me saving for child education is the most important goal for parents. Other goals like buying car or buying home can be compromised, but we cannot compromise our child education.

When it comes to child education planning majority of people rely on child education plan which ends up paying them peanut type returns. In this post, I will be highlighting details of growing child education cost and will be giving education planning calculator.

Follow steps are given below to plan your child education.

1 Set Target Year

The first step is to find out target year for education expense. It is very easy to find out this if your child age is 1 year then he will enter in graduation year after 18 years. If he is likely to do MBA after graduation you need to consider target age 21-22 year for MBA.

2 Find Current Education Cost

The second step is to find current education cost. Arriving at current education cost is somehow difficult. First you need to decide that which educational institute you are planning for your child. You have various options like Regional Engineering colleges, IIT etc for engineering. You need to find out current education cost applicable to that course in the specific institute.

3 Find Future Education Cost

The third step is to find future education cost. Inflation rate comes in to picture at this stage. You can find future education cost by using simple excel formula of FV.

4 Find Monthly Investment Amount

In order to find out monthly investment amount required you can use simple excel formula PMT. PMT formula calculates constant payment on constant interest rates.

5 Invest in Suitable Investment Option

Once you are done with all above step you need to find out investment option which can generate a return as per your expectation. You can select good mutual funds which can generate a return in the range of 12-15%.



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