How to Plan and Save for Your Child’s College

The cost of education has shown a steep rise in India, which can cause serious concerns for parents. But that shouldn’t stop you from supporting your kids’ dreams. Whether it’s studying medicine, engineering, or a specialised professional course abroad, you need to have a robust financial plan and start preparing today. To assist you and make this journey easy, we’ve curated some of the best tips to plan a college savings fund. Read on to find out more.  

Basic guidelines to secure money for college savings  

Here are certain rules that you can follow to create a disciplined financial plan: 

1. Start early to generate wealth over a long period of time.
2. Consider the inflation rate when planning.
3. Have separate savings for specific financial goals, be it college savings or healthcare.
4. Take advantage of compounding interest rate.
5. Make sure you are aware of the current value of your goals (here, college savings).
6. Regularly review your plan and make adjustments if necessary.

Ways to grow your money for college savings 

To help you prepare for your child’s future, here are some suggestions for planning for their education.   

1. Define the timeline
   You can start preparing to save and invest for their college fees while your child is in school. Get to know your child’s aspirations and what field they want to step into. You should understand their study plan to set a timeline and make your investments accordingly. The more time you have, the easier it becomes to plan and invest.
2. Calculate the education costs
   This step will help you plan your investments and avoid significant financial strain in the long term. Every individual’s cost of education is unique. If you have two or more children, you may have to evaluate this separately for each. To calculate the amount, factor in the cost of the program/course that your child might be interested in, be it national or international. This way, you will know the amount of money you need.
3. Have a dedicated savings account for college savings
   To avoid unnecessary withdrawals, you may want to consider a separate savings account. Make regular deposits based on the monthly budget you create to save up. Also, don’t keep the money stagnant; invest it in different savings instruments. You can consider recurring fixed deposits to harness the power of compounding interest rates.
4. Consider long-term investment plans
   Since this is a long-term financial goal, your investments should also be planned accordingly. You can opt for a SIP (Systematic Investment Plan). It is a way to invest in mutual funds by investing a fixed amount on a regular basis. Another great option is the PPF (Public Provident Fund). It is a 15-year investment scheme that you can open in the name of your child. It offers tax-free savings to build a corpus over time while balancing risk.   
5. Select personal loans to meet immediate needs
   Personal loans can help you meet different costs associated with college life. Whether it’s accommodation, living expenses or tuition fees, they can cover anything and everything. As a parent, you can get a high loan amount without the need for collateral. With minimal documentation and quicker disbursal, you can apply for a personal loan hassle-free. When considering this option, choose the right lender that offers you flexibility in repayment and a better interest rate.  

Start savings today with Kotak811 

It is never too late to begin saving. So, start now by applying for a Kotak811 Savings Account. Even a small number of deposits can help you cover college fees up to a certain extent. With an interest rate of up to 7% with ActivMoney, you can save for your specific financial goals and achieve them with confidence. Plus, the process to apply for an account is easy and quick. To manage your money, you can download the Kotak811 App and closely monitor your savings.