Hi, I have twin boys 6 year old. If I want them to target having a graduate/ post graduate study from a good school in US, how much higher education funds should I need to accumulate per child over say next 12-15 years. Ofcourse it depends on their capability to join such schools but having an idea about my preparation is also important.
Ans: Absolutely, planning for your children's higher education is a wise decision that requires careful consideration and preparation. Let's discuss the factors involved in estimating the funds needed for their graduate/post-graduate studies in the US over the next 12-15 years.
Understanding the Cost of Higher Education
Genuine Compliments to your foresight in planning for your children's future education. It's crucial to recognize that the cost of higher education, especially in the US, has been rising steadily over the years. Tuition fees, living expenses, and other associated costs can vary significantly depending on the institution and the course of study.
Estimating Future Expenses
To estimate the funds needed for your children's education, consider factors such as:
Tuition Fees: Research the average tuition fees for undergraduate and postgraduate programs at reputable universities in the US. Factor in annual tuition fee increases.
Living Expenses: Account for accommodation, food, transportation, books, and other miscellaneous expenses. These costs can vary depending on the location and lifestyle choices.
Inflation: Factor in inflation to account for the rising cost of education over the next 12-15 years. Inflation can erode the purchasing power of your savings, so it's essential to plan accordingly.
Setting a Target Corpus
Once you have an idea of the potential expenses, calculate the total funds required for your children's education. You can use online calculators or consult with a Certified Financial Planner to estimate the target corpus based on your specific requirements and assumptions.
Saving and Investing Strategically
To accumulate the target corpus for your children's education, consider the following strategies:
Start Early: The earlier you start saving and investing, the more time your investments have to grow. Even small, regular contributions can accumulate significantly over time due to the power of compounding.
Systematic Investment Plan (SIP): Consider investing in mutual funds through SIPs to benefit from rupee-cost averaging and discipline in savings.
Diversification: Diversify your investments across different asset classes to spread risk and enhance returns. A mix of equity, debt, and other investment instruments can help you achieve your financial goals.
Adjusting for Contingencies
Life is full of uncertainties, and it's essential to prepare for unexpected events that may impact your ability to save and invest for your children's education. Build an emergency fund to cover unforeseen expenses and ensure financial stability during challenging times.
Seeking Professional Guidance
As a Certified Financial Planner, I'm here to provide personalized advice and guidance tailored to your specific financial situation and goals. I can help you create a comprehensive financial plan that includes provisions for your children's education while considering your overall financial objectives.
Conclusion
In conclusion, estimating the funds needed for your children's higher education requires careful consideration of various factors, including tuition fees, living expenses, inflation, and investment strategies. By starting early, saving and investing strategically, and seeking professional advice, you can better prepare for your children's educational aspirations.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in