How much do you need to save monthly for your child's higher education

Young parents would agree, raising a family is challenging and rewarding at the same time. Parents need to do a lot of things at once, like caring for the child’s health, planning his rudimentary and higher education, and many others.

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Proper education plays a crucial role in shaping and building a child’s future, and it doesn’t come cheap. Therefore, young parents need to focus on creating a corpus that is large enough to support their child’s future education expenses.

• How much money do you actually need?

It entirely depends on what your son or daughter wants to study in the future. To give an idea, an engineering course from a reputed college may cost around INR 6 to INR 7lakhs in the present time. With an almost 11% to 12% percent inflation rate in the education sector, that course fee may double in about 14 years. So, if your child is 4-years old now, you will need INR 14lakh to INR 15 lakh in the next 14 years.

This expense may largely vary if your child opts for a foreign degree.

• How much money do I need to save every month?

This calculation is simple. To build a corpus of INR 15lakh in just about 14 years, you need to save at least INR 1 lakh per year. It means you need to save approximately INR 9000 a month. To calculate for other targets, just follow this formulae, –

Target amount /(divided by) number of years remaining = result /(divided by) 12 =  monthly instalment

• How do I save for my child’s education?

There are many ways to save for your child’s future education. Some people choose to invest in mutual funds for this reason. They invest for a period of time through simple SIPs. Other people like to maintain a recurring savings account in a bank.

Additionally, there is another way of creating a fund for your child’s future education. It is through purchasing the HDFC Life Sanchay Plus plan. While all the other methods only raise the fund, HDFC Life Sanchay Plus offers savings and life cover. 

HDFC Life Sanchay Plus’ plan has 4 options–

• Guaranteed Maturity Option (Equal to guaranteed sum assured on maturity plus accrued guaranteed additions)

• Guaranteed Income Option for a fixed term of 10 or 12 years.

• Life Long Income Option – Guaranteed income up to the age of 99 years and a return of total premiums paid at the end of payout period

• Long Term Income Option – Guaranteed income for a fixed term of 25 or 30 years and a return of premium at the end of payout period

For complete details on the above options you can visit the HDFC Life website 

Buying the HDFC Life Sanchay Plus will also help you save tax. 

To conclude

Now that you know how to save for your child’s future education, take diligent steps in choosing the right way. For expert help, visit HDFC Life.

(Disclaimer: Brand desk content)