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How and when do I begin saving for my child’s college?

A hint: Start investing when you are expecting a baby

Short answer: Now, if you haven’t started already!

The right time to save for your child’s college is as early as possible. Experts advise people to begin when you’re expecting a baby. For instance, baby shower is a good time. You could start investing the gifts or shagun that you get during the occasion. Read on to know why.

Fast-forward to the future

Imagine the day your child receives an email from a top college which says that his/her application has been accepted. It is a proud and happy moment for both you and your child. If you’re not financially prepared, this moment would be a jittery one. You’d be frantically going through your savings and investments to find the funds! You might even consider cracking open your retirement corpus to pay for your child, leaving your future in trouble.

Now imagine a situation where you have been investing, and are financially prepared for it. When your child shares the good news, you can celebrate and enjoy this moment with your family.

Growing interest rates of education loans

Taking an education loan is an option, but the way interest rates are rising, you might want to think twice about it. You’d also not want to burden your child with an exorbitant education loan when he/she steps into the first job. Since you have the time to invest and get inflation-beating returns, why opt for something you’ll have to pay extra for later?

Education in India

According to a recent report produced by NDTV, the cost of studying in IIT got doubled. From about Rs.90,000 to about Rs.2 lakh per year. This is just the college fees and it will increase by a large range by the time your child completes schooling. Along with fees, there are other expenses you’ll have to take care of like books, stationery, food and accommodation

Up, up and away to another country

With the rising costs, doing an undergraduate in a foreign country is getting expensive every year. The accommodation and food costs higher than that in India. A buffer would be needed to help your child have some wiggle room before he/she settles down.

Calculations and assumptions

Assumptions and calculations will help you get an approximate number to start investing. Here is a calculator that will help you with Indian education costs. If you plan to invest for good overseas education of your child.

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