Arti Arora, CFP | Head Financial Planner

I remember the time when our board results were out and all our relatives would call up to enquire about the results. Nothing has changed since then and the inquisitiveness still remains. For parents, there is a bigger underlying tension of ‘what next’ that adds to the anxiety. The cost of education has been rising sharply and in fact the education inflation index stands at the highest when compared to any other inflation index. This is the prime reason why we insist on the need and the priority that one needs to attach to the education planning goal for children. With rising competitiveness and limited number of seats in government colleges; private colleges or an education abroad are the only options left to the majority parents. The costs for these are exorbitant and if not planned for, it can be a very difficult and draining situation for anyone. The average cost of three years of graduation from a private college today is anywhere between Rs. 15-20 lac and for post-graduation is anywhere between Rs. 20-25 lac. The cost of education abroad is much higher. If one had the foresight and has planned for these, life does become much easier. In a contrary scenario, it can be very unnerving and while one tries to liquidate investments and make the required funds available. In case of a shortfall, the only option left is to avail of an education loan which most parents like to avoid, lest it becomes a liability for their children. Let us take an example where a child’s graduation is due is 5 years. The cost of education in 5 years would become Rs. 21 lac up from Rs. 15 lac taking an inflation rate of 7% and you would have to save about Rs.29,000 per month at an assumed portfolio return of 9% towards building up the required corpus for this goal. To any rational person, saving and investing Rs. 29,000 per month for 5 years would be a prudent alternative to having to find the money in one go when the goal actually becomes due. Personal finance is a world of immense possibilities and timely moves can actually land you in a winning position, hence keep planning and you will meet all your life financial goals with much ease and without much ado