Every parent wants best for his children especially when it comes to education. Education plays a major role in shaping the future of our children. However, the rising cost of quality education demands that parents start saving as early as possible. Below given table shows the growth rate of education courses in the last 10 years. We have taken 3 major courses, you can take any course your child is interested in and analyze the cost of education.
Courses | Cost in the year 2009 | Cost in the year 2019 | Growth rate in the last 10 years |
B.Tech | 3.6 lakhs | 10 lakhs | 10% |
MBA | 5 lakhs | 19 lakhs | 12% |
M.B.B.S | 10 lakhs | 25 lakhs | 10% |
As parents, it’s our responsibility to make sure we have the necessary funds to facilitate our children’s education. And, this can only be possible if we plan long ahead, by managing our funds and investing them in the right direction.
Before deciding how much you need to save, you first need to decide the estimated fund requirement for your children’s higher education. Although it is tough to decide the actual amount, the best we can do is to consider a few important things like the course, in mind while doing our calculations.
Currently the education inflation rate is 7% in India. There is a huge gap in the growth rate of education costs. The way education costs are rising, the cost of higher education in India for M.B.B.S can go upto Rs1 crore in next 10 to 15 years. So, you need to plan accordingly. The investment instrument you choose should include the duration and the fund required.
Courses | Expected cost in 5 years | Expected cost in 10 years | Expected cost in 15 years |
B.Tech | 16.5 lakhs | 25.9 lakhs | 41.7 lakhs |
M.B.A | 30 lakhs | 49.2 lakhs | 79.3 lakhs |
M.B.B.S | 40 lakhs | 64 lakhs | 1.4 crores |
If you are starting early, determine the cost of primary & secondary education. The annual cost you will calculate will determine the future amount by considering the rate of inflation. Sameway you can do for higher education and determine the approximate fun requirement. The easiest thing you can do is that you can benchmark the amount against the most expensive courses in India. This will help you in avoiding any shortage in future. Along with the educational courses, add transport cost, hostel fees, extra-curricular activities etc.
There are several investment options available such as FDs, mutual funds, PPF, government schemes for children, Insurance policies etc. While choosing the best investment option, try to grab the one which is providing you the maximum returns. The selection of a plan should also depend on how much time is required to achieve your goal. One can go for short-term funds like fixed deposits, if you have less time to invest whereas long-term funds like SIPs are ideal if you are investing early.
The cost of education is rising day by day, if you don’t start now, funding for your children’s education will be more challenging in future. Starting early will provide a larger sum along with the power of compounding if you invest in mutual funds. A big amount of RS 1 crore may seem daunting but there are ways to save this amount with a simple SIP of rs 9000 for around 18 years. You can choose any investment option from the above given points according to your future goals. So, plan as early as you can and get the best investment instrument for your child so that you can give wings to your child’s dream without facing any shortage.