“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.”- Malcolm X
There is nothing more precious to a parent than his child. Every parent wants the best for their children, and do not leave any stone unturned when it comes to the happiness of their child. Be it clothes, toys, books, education, surroundings or food: parents work hard to give their little one the best of everything.
But the best is expensive. It cannot be paid for with just monthly salaries. When it comes to education, it requires collective savings and planning to pay for. Managing it has to be done either through your accumulated monthly income or there is also 12 month loan for bad credit with no guarantor by direct lender available in the UK from British Lenders. Here is a helpful guide on how to plan the education funding of your child.
The first step is to explore your options to save along the years. Nowadays, some parents have even started saving for their unborn child’s education.
- Children’s Savings Account– Banks offer a special children’s savings account where you can save on behalf of your child till he is 18 years of age. You can opt for a monthly or regular saving type of account, depending upon your convenience. The interest varies from 3.5% to 4.5% depending upon your choice of savings and the bank. Your child can either open the account with you as a guardian, or you can open the account on his behalf. Usually, the amount from such accounts is withdrawable only by the child, once he turns 18.
- Junior ISA (Cash or stocks and shares) – Junior ISAs are tax-free savings account for children under 18. You can deposit £4,368 (for 2019-20) into your child’s junior ISA account every year, tax-free. The child has access to the money saved in the ISA account after turning 18. You can invest in a Junior ISA account in the form of cash, or you can invest in stocks and shares, as long as the amount does not exceed £4,368. You can choose either of the options depending upon the amount of risk you are willing to put in. While depositing cash will get you a fixed rate of interest as a benefit, investing into shares may or may not be a profitable investment.
- Mutual Funds– If your child is still young, you can start investing in equity mutual funds, after analysing your returns after a decade. Mutual funds are always subject to market risk but can be profitable for you if you take expert advice. Equity mutual funds have been known to give more than 10% annualised return to investors.
- Term Deposits– These are fixed rate bonds that require you to deposit a fixed amount of money for a selected period of time. You can save from your regular income for some time, and then deposit that amount in a fixed rate savings account. Your money earns interest over that time and you can save more in the meantime. Early withdrawals from these fixed deposits are possible, though with an attached penalty.
- Your plan for funding the education of your child highly depends on the age of your child. You should carefully realise how much time you have until you need those funds, and how much of funds would you need. When you know the time you have and the amount you need, it would be easier for you to devise a smart course of action to reach that goal.
- Avoid investing in low return investments. You may or may not have a lot of time. Choose wisely across the funding options available to you to get the best returns in the future. When it comes to your child, more is always less. Maximise your savings and returns by opting for smart investing choices.
- Always take inflation into account while deciding how much money you need at the end. The college fees today would not be the same when you are sending your child off to college. Save according to future needs, not of the present.
- Ensure yourself to keep your child safe. All your efforts matter as long as you are with your child. The future of your child should not be at stake if you are not around.
- Keep increasing your investment over time. Your salary will increase over the years, and so should your investment. Decide on a fixed percentage of your income to save money every month.
- Review your funding plan at the end of each year. Study the returns and status of your savings. Know where you are in reaching your goal. You might want to change your course of action in case things are not going at the right pace.
There is no time like the present to start. One step of yours can go a long way for your child. And education is the foundation of his entire life. Be a smart parent. Start saving today, and give your child the happiness he deserves.