We all work and earn to enjoy the good things in life.
A trip abroad, a new car, a well furnished house with modern amenities – we work more harder each day and save more to fulfil these aspirations of life. But if savings donโt grow at a rate higher than the rate at which expenses are, we might end up being poorer than we were in spite of the savings.
A few years back an MBA would cost Rs.150,000/- today the same degree costs Rs.700,000/- and the best institutes have even higher fees.
The fees will definitly rise with the rising standards of education but we will show you how just basic inflation could make the current education in the future so expensive. Just refer the chart below for an indication of what we are talking about.
An education that costs Rs.7 lacs in 2010 would cost more than Rs.15 lac in 2030. Here the inflation rate is assumed at a basic rate of 4% and we have not considered the rise in expense due to reasons other than inflation.
Even then it feels large because it is. But definitely it is easy to raise that money if you plan your savings scientifically from today. And we will assure you donโt compromise on your childโs future.
The table gives you an outline of investments needed to garner this corpus:
As per the table if a child is mere 5 years old, then a systematic investment of Rs.5000 by his guardian, for 10 years could produce Rs.13 lakhs. It could be just enough for the childโs education who would be 15 years old by then.
The education expenses are definitely not so large that they cannot be met. Yes, if we do not plan then it could turn out to be insurmountable. The first step is to estimate the total education expense which includes fees and other ancillary expenses. Estimate the corpus requirement and finally develop an investment methodology to achieve your child’s education goal.
We therefore emphasize the importance of planning in financial matters and it is advisable to begin early. Time wasted in this case is as much as money lost.