Investing Overseas

Financial Planning Tips to Fulfil Your Child’s Overseas Education Dream


Financial Planning Tips to Fulfil Your Child’s Overseas Education Dream
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As parents, you must have always encouraged your child to study hard for an excellent, bright future. And if your child has been dreaming to get into a world-class university abroad, you don’t want to compromise on that dream because of low funds.  To ensure that your child receives the very best and also does not have to get buried under loans in future, you should have a strong financial plan in place. Considering your current income, savings, and the inflation rate; the earlier you start accumulating funds, the better. Here are 6 things to keep in mind while planning finances to support your child’s overseas education dream:

1. Estimate The Entire Cost

The first thing you will probably think about is the college’s tuition fees and how to pay them. But you also need to factor in other expenses such as accommodation, food, utilities, and transportation. After all, your kid will have to settle and start a new life overseas.  Therefore, to make the transition as easy as possible, take a crack at the budget and break it down into smaller manageable goals.

2. Evaluate The Best Sources of Funds

Once you’ve got a budget, check all the sources of funds including your savings that could be from PPF, mutual funds, or fixed deposits. The foremost thing to do is try and apply for scholarships and grants that can take care of at least half your expenses. Next, check the available education loans for studying abroad to help you manage the remaining amount.

3. Plan Your Investments

Once you analyze your current assets and liabilities, you will get an idea of how much more you need to save. Considering the inflation rate, it is better to invest your money and let it grow over the years. And if your investment horizon is lengthier than 10 years, it is imperative to diversify your investments. While FDs, gold, real estate, and equity mutual funds are always an option, it is worth considering dollar investments like foreign stocks for abroad studies depending on your risk appetite.

4. Review The Investments Periodically

It is good to review how your invested money is performing from time to time given the market situation. If any of your investments are not performing as desired, you can make changes to them in time. For example, if the price of gold suddenly starts dipping or a mutual fund investment is not giving expected returns, you will need to shift your invested money elsewhere.

5. Get Insured

You can earn, save, and invest as long as you are healthy. But what if you meet with a sudden accident or have an untimely demise?  This is where life insurance, a term-end policy, and health insurance come in handy. Plan for an insurance sum that can at least take care of your child’s tuition fees in case of your absence or inability to earn.

6. Shift Your Portfolio to Less Risky Avenues

If you think you have accumulated a substantial amount, consider shifting that investment to minimum risk avenues to secure it rather than losing it due to market instability.  Examples of less risky avenues include savings accounts, money market accounts, FDs, governments bonds, and debt mutual funds as these options are highly safe and provide good liquidity due to the least market exposure.

Many parents jeopardize their present needs or future funds to fulfil their child’s dreams, but that is not the right way to go about it. Instead, keeping the above things in mind, wise up on how to make a solid child education plan which includes a budget, study loan for abroad, investments, and insurance.  The importance of starting early cannot be emphasized enough – the earlier you start, the less stressful it will be for you to accumulate the required sum of money. Also, consider sharing the responsibility with your kid once they are in college. Explain to them the value of earning and saving money for their own benefit.

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