One of the financial goals that I find most common and top-of-mind for my clients is that of saving and providing for their children’s education. This is especially true for college education and beyond. The Mint paper had a nice graphic to capture this:
In my own experience, the amounts that parents do spend ends up actually being multiple times this figure, particularly if they want to send their kids abroad or to a top-tier college. And, as shown in the chart above, the tuition cost ends up being less than half the amount that is needed as students have to pay for living accommodation, food, travel and laptops etc. These costs can take a toll on the finances of parents, who generally tend to spend out of their current earnings rather than saving ahead of time.
From the Mint article:
A recent report, titled The Value of Education, the Price of Success, by HSBC said the cost of higher education is being financed by parents by sacrificing personal time to earn the extra money needed to send their children to university. The study said one in two parents take up a second job or work for extra hours to get the money needed. HSBC polled 505 parents and 100 students in India for this report, and 10,478 parents and 1,507 university students across 15 countries and territories.
About 79% of parents fund their children’s university education from their regular earning rather than savings, said the report. Most parents end up sacrificing on personal time and leisure to be able to back their children’s higher education. They take fewer number of holidays and prefer low-cost vacations. About 64% parents have taken on some kind of debt for their child’s university education
All this becomes especially worrying for parents, given that the cost of education is going up rapidly every year. So what is one to do if they are in such a situation and need to plan for their child’s tertiary education?
Disclaimer: All the information above is for education use only and should not be construed as advice. Please do your own research and consult a qualified financial advisor who can help you plan for your goals and advise you on the best way to save for them given your personal financial situation.
Rishad is the founder of Kairos Capital. He started his career with Standard Chartered Wealth Management and has extensive experience in markets, particularly in terms of mutual funds and stocks.