How to Save Money for Higher Education?

Execution of effective investment strategies is essential while securing an obstacle-free higher education in the 21st century. Moreover, as even primary education has become quite expensive these days, one can naturally assume the pressure on students regarding fund arrangements required to fulfil their higher study dreams.

However, the most important thing to consider here is that these dreams are achievable even for middle-class families. They should understand how to save money for university fee structure. We have covered the various viable options in this article.

We have compiled the following savings tips for students working to accumulate enough funds for higher education and for parents intending to save big for their child’s college fees.

1. Start Saving as Early as Possible

Parents and students must rely on a substantial corpus dedicated to higher education before applying to a college. Therefore, starting late will certainly jeopardise one’s academic goals, and they may have to compromise on the compounding benefits. Choosing long-term debt funds can be the perfect option for those thinking about how to save money for university fees and additional charges like hostel fees, food costs, etc. In the long run, the returns will successfully beat the high inflation in the education sector. Moreover, the student will be better able to focus on their studies to generate an appreciable ROI.

2. Opt for Long Term Investment Plans

Long-term investments bring in the compounding factor mentioned above and create a sense of financial discipline among individuals. Many saving options, like insurer-approved child education plans, tax-free bonds, PPF, etc., are viable options if your higher education is estimated to begin at least 10-15 years from the beginning of the investment.

3. Start Putting Your Money in SIPs

Systematic Investment Plans are quite favourable to meet mid-term and long-term life goals like a child’s education. As you begin investments through a brokerage account, you get assistance on investment tips. Moreover, helpful insights are also shared with the users regarding which funds have outperformed the rest in recent years. 

Nowadays you do not need to ponder on how to save money for university through SIPs. This is because SIP investments are possible with a sum of ₹500 or even lower, making these instruments more affordable for all. So no matter how little you contribute to your SIPs, you should aim to save more as your income increases progressively. Only ensuring this will make sure you get to see the compounding magic in action after a period of 5 years or so.

4. Consider Auxiliary Investment Options

Continuing our discussion on long-term solutions, financial advisors suggest investing in the various forms of equity mutual funds for exponential growth within a slightly smaller period (5-7 years). Flexi-cap and mid-cap funds are good options for you, provided that you save a good corpus for a college education. These mutual funds include shares of all small and mid-scale Indian promising companies and come with measured risks as the fund managers actively manage them. Also, you can easily invest in them as there are no such eligibility criteria. You can even start without having a Demat account.  

So, following the above course of action, you can define the whole saving strategy for higher education. Now we will discuss a few additional measures to avoid the most common mistakes while saving money.

It will help if you take care of specific factors to ensure the saving process is not disrupted mid-way. Also, following the below-mentioned tips, you will remain motivated throughout the journey by seeing positive results.

Evaluate University Costs

Getting this calculation right will allow the person taking care of educational expenses to take measured investment risks. Also, this measure will free them from the extra burden. In addition, virtual tools on various websites help you draw an estimated quote for a specific course by analysing patterns in the preceding years. Parents and students must discuss within themselves the desirable curriculum for which the candidate will be preparing. Based on the outcome, preparing for meeting private college fees will be beneficial, which will vastly vary from government institutions. 

Build an Emergency Fund

Students must consider arranging emergency funds in bank savings accounts or liquid funds. If you skip this part, then it is probable that you may require liquidating funds that were otherwise meant to support your educational expenses. Hence you should arrange emergency funds that can support your lifestyle for at least 6-9 months.

Get Insured

Parents who are currently saving for their child’s higher education should resort to purchasing a term plan. It will remove a large part of financial stress as these policies assure them that the coverage will fulfil the child’s education and make up for the lifestyle expenses for some years thereafter.

Go for an Education Loan Only if You Really Need One

Although it should be manageable if you follow all the mentioned instructions while saving for higher education, there remains a slight chance of falling short of goals as our fast-paced lifestyle is quite unpredictable. You can apply for education loans to cover the extra expenses. Relying on these credit facilities becomes essential as spending too long trying to save money will lead to losing opportunities. But adopting such a liability should be the last resort if all other plans fail to achieve the end goal.

Meeting higher education expenses is a severe concern often experienced by most Indian parents and students alike. Therefore, it is crucial to navigate the various savings tools as it helps channel long-term investments. 

This article is all about how to save money for university education, and mentioned here are a few additional measures that each student and their parents should take into account if they are on the verge of starting savings for education.