Investing in your child’s future and higher education carries a heavy price tag. It blends the hard-earned fruits of your labour along with your aspirations for their career path. At this point, witnessing their personal and professional growth becomes a crucial realization of every parent’s heartfelt vision.
This is why financial planning for your child’s higher education is important as it helps establish the feasibility of the financial goals. It also helps you ensure that you obtain the necessary resources to achieve them. In this blog, we will take you through the steps required to do financial planning for higher education, and how to achieve them.
Steps Involved In Planning Finances For Higher Education
Before you begin planning for your child’s future, it is important to consider the factors that affect the cost of education, including:
- Tuition and fees, technology health care, recreation, length of the study program
- Books and supplies, textbooks, course materials
- Transportation, parking, public transport, fuel costs
- Location of study: on- or off-campus, housing, food
- Other miscellaneous expenses, personal expenses, entertainment
After considering and assessing the potential costs involved on a more numerical level, it’s time to start outlining your financial plans.
– Determine The Educational Objectives
Define the educational goals to determine the study program, its duration, and the right institution. It is essential to establish short and long-term educational goals to understand what is to be achieved.
– Focus On The Educational Goals
Make sure to prioritise your education goals after setting them. In this process, you must determine which goals are crucial and which ones can be managed later. For instance, if you have several educational goals, focus on taking up a certificate program before pursuing a bachelor’s degree.
– Assess The Achievability Of Educational Goals
Your next step is to assess whether the education goals you’ve set up are achievable as per your financial status. This includes recognising the resources needed, such as tuition, fees, and living expenses, and determining the time and effort required for each goal.
– Identify Funding Sources
Do you need to obtain grants, scholarships, or loans for enrolling your child into a study program? While you do this, you must consider the pros and cons of each source based on your financial standing and academic objectives. These grants and scholarships are awarded based on your financial needs. Loans require repayment along with interest.
Other funding sources may involve savings, investments, and work-study programs, if available. So, setting aside a portion of your income over the years can help in saving up for your child’s college education.
– Create An Education Budget
Budgeting for education ensures you have the necessary resources to fund your child’s higher educational needs. It also keeps you financially on track in case you splurge on expenses as you take into account the college fees, tuition cost, living expenses and so on.
– Allocating Funds For Education-Related Expenses
Aside from the essentials, allocate funds for books, supplies, transportation, and miscellaneous expenses. This helps you stay financially responsible and avoid overspending.
– Manage Education Debt
Make sure to understand the loan terms and conditions if you choose to opt for it for your child’s education. Create a budget and develop strategies like participating in loan forgiveness programs, making additional payments, and refinancing. It can also help in managing any future education debt efficiently.
Planning the finances for your child’s future education can help them achieve their dreams. With efficient planning, you can manage their academic goals easily. Also, you don’t have to do this alone! As a professional financial planner, seek the right advice and sources to map your child’s academic journey.
FAQs
- Is there a way I can also work on a plan to reduce the educational costs?
You can work on reducing the cost of education, including utilising tax credits and seeking grants and scholarships.
- What happens if I don’t do education planning?
You are risking your child’s dream goals. As they grow up, they will develop aspirations that will require resourceful funding. Also, competitive fields are expensive, which is why financial planning for your child’s education is necessary or else they may have to compromise on their dreams.
- Why do I need a financial planner to help me manage funding for my child’s higher education?
A financial planner is a professional who understands the current scenario of expenses in various segments. Financial planning is a long-term endeavour that requires the intelligence of a professional with the right experience and expertise.
