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Why you should over-estimate your child’s education goal

As lifestyle costs become demanding, you must also cater for incidental expenditures linked to higher education.

There was a time in the Indian education system when getting an overall score of above 60%-65% was considered exceptional; no longer so. Children, no matter in which educational board, strive to get 90% and above in the primary education in a bid to make the cut off for the best colleges and institutes in the field of study they want to pursue. 

While children struggle with the fierce competition in grades, parents struggle with the rising cost of education. Be it in domestic colleges and private institutions or overseas universities, costs have risen consistently in the education industry. Moreover, as lifestyle costs become demanding, you must also cater for incidental expenditures linked to higher education. 

Incidentals you need to keep in mind

1. Lifestyle costs 

While preparing for your child’s education expenditure, its prudent to budget for the tuition fees, books, stationery and living costs like travel and food. However, in recent years a higher proportion of lifestyle costs also gets added to this budget.

Eating out, coffee shops, frequent additions to the wardrobe, movies, phone recharges, and gadgets both important and frivolous, are some examples. When your child, who is studying at least a few hundred kilometres away (if not a few thousand) calls up to ask for a new phone, you won’t be able to say no. 

2. Travel and adventure

If you are sending your child overseas, this incidental cost can eat into a big portion of the pie. Some children want to experience and explore a new geography. Others take up adventure sports like rock climbing, para sailing or even simpler things like horse riding or football. 

Financing their extra-curricular activities is up to you. Again, saying no, may not be easy given that such experiences help your child be socially relevant in a new place and might also help balance out the academic load. 

Tuition plus incidentals add up to a lot and often will be beyond budget. Just saving from an early date is not enough. You have to ensure that savings grow in value and for that you must pick the right investments.

3. Medical

You can get an insurance for medical costs, but nevertheless have a small amount budgeted and kept aside as ready, immediate payment. This part of the incidental budget gains even more importance if you are sending your child overseas as medical expenses can be substantially higher. 

Don’t just save, invest

Tuition plus incidentals add up to a lot and often will be beyond budget. Just saving from an early date is not enough. You have to ensure that savings grow in value and for that you must pick the right investments. Investments which can be held on to for long periods of time and have the potential to deliver returns beyond the annual education price rise, are what you need. 

While many assets can provide this growth, equity investments through stocks and mutual funds are a flexible, liquid, and transparent way to invest for long term capital growth. Start investing in growth assets as early as you can so that you are able to build a pool of funds that surpasses the budgets you eventually put in place for non-negotiable goals like your child’s higher education. 


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