5 things to avoid while planning for your kids’ higher education

financialexpress.com:

Parents are increasingly prioritising their children’s higher education, driven by a growing awareness of its increasing costs. Consequently, they recognise the importance of diligently planning their investments well in advance to secure the adequate funds.

However, parents often encounter financial challenges that hinder their dreams. Some mistakes can lead to a shortage of funds when it’s too late to make amends. To prevent such issues, parents must pay attention to the planning for their children’s higher education.

Here are five things to avoid when planning to fund your children’s higher education:

Higher education for children is a long-term financial goal, spanning 18 to 20 years. Many parents mistakenly believe they have ample time to plan and delay their investments. However, delaying even by a year can significantly impact your investment’s compounding effect and necessitate a larger investment.

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For example, if you start investing — when your child is born — with a 12% average rate of return, you’ll need to invest slightly over Rs 5,400 monthly to reach a goal of Rs 50 lakh in 20 years. But a one-year delay increases this monthly requirement to nearly Rs 6,200, and a delay of five years raises it to about Rs 10,500. A 10-year delay escalates the monthly investment to a staggering Rs 22,300—more than four times the initial amount. Starting early, therefore, is crucial for success.

Adhil Shetty, CEO, Bankbazaar.com, says, “The cost of education, especially higher education, is skyrocketing with each passing year. By planning ahead, you can spread the financial burden over a longer period, making it more manageable. Secondly, starting early