Child Education Fund Calculator

What is Child Education Planning?

Inflation is a very real obstacle to be overcome in the wealth building process. But it’s not just food and other living expenses where we feel the pinch of inflation. Education costs too are galloping and going by data, at a rate faster than overall inflation.

The fact that education costs can rise much faster than headline inflation tends to get missed very often. To put the impact of inflation in perspective, consider an inflation of 6 per cent a year. An engineering course that costs Rs 6 lakh today will grow to Rs 14.4 lakh after 15 years. Similarly, an MBA course that costs around Rs 10 lakh would cost around Rs 24 lakh after 15 years.

At the time of need, therefore, parents suddenly find themselves short of funds, and will then have to resort to loans to bridge the gap. Taking on debt at a later stage in life also throws other financial goals such as retirement in disarray.

This makes planning for your child/children’s education extremely important. An ever-growing variety of higher education courses to choose from, and not just in India, can complicate matters further.

But it’s not as simple as finding out the cost of a few possible courses and then putting away that much. You need to plan for how much these courses could cost when your children will enroll in them, which could be 10 or 15 years away. To do this, you need to estimate the goal, and also the steps you need to take (in terms of investing regularly) to hit that goal. You also need to make sure that the returns on your investment outpace education inflation. This is child education planning.

Benefits of Using Child Education Planning Calculator

Helps you understand how much college courses can cost down the line so that you are not caught off guard at a crucial time.
Reduces your dependence on loans to meet your child’s educational needs.
Helps you plan how much you need to invest to build the amount required, and helps prioritize savings as education is a non-negotiable goal.
Allows you to choose the right mutual fund schemes and investment avenues to meet the estimated amount needed.

How to Use the PrimeInvestor Child Education Planning Calculator?

The following are the steps to follow to use the PrimeInvestor child education planning calculator:

Input the cost of education in today’s value. The cost of education will vary depending on the nature of the course. Since you do not really know what course your child will take, you can take a rough average of the bigger and more popular courses to get an idea.
Arrive at the number of years you have until you need the money for your child’s education.
Enter the rate of inflation by which education costs can go up. While you may want to simply go with the overall inflation number, you can use specific breakdowns available for education inflation for a more accurate estimate. This will be available on the website of the Ministry of Statistics and Programme Implementation.
Enter the rate of return on the investment that you expect. Do bear in mind that being realistic with your return expectations will help you achieve your goal better.

After keying in the above details, the calculator will give you two results: one, the estimated future cost of education and two, the monthly savings that will help you reach that amount.

FAQs

When should you start investing for a Child Education Plan?

There is no right time to start investing for a child’s education, but the sooner you start, the more time your investments have to compound and grow. Even if the monthly amount seems high, starting with whatever little you can is better than starting late and facing large payments and insufficient savings later.

Top Mistakes Parents Make While Investing for Their Child’s Education:

- Not factoring in education inflation, which is higher than overall inflation.
- Not starting soon enough.
- Not having a plan with a targeted amount and required monthly investments.

How to Save for Education?

Knowing how much you need to save each month using the education calculator and the number of years you have to build your corpus will help you design a suitable portfolio. At PrimeInvestor, we provide specially designed portfolios that suit your education goal requirements. You can use these portfolios or build your own using Prime Funds, our recommended mutual fund list. Prime Funds is categorized to help you choose the best funds based on your risk level and time frame, making it easy to create a diversified portfolio.

**Disclaimer:** This financial calculator is provided for illustrative purposes only. The calculations are based on assumptions and estimates, and actual results may vary. The calculator does not constitute financial advice and should not be solely relied upon for making financial decisions. Users are advised to consult with a financial advisor for personalized advice.

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