Financial Literacy - Child Education

Child Education Child Education is one of the most important responsibilities of every parent. Child education has become so costly today that, if proper financial planning is not done, it may lead to problems both for the child as well as for the parent. Every parent wishes that his/her child gets the best possible education, but because of the burgeoning cost , the parent or the child, sometimes have to compromise and go for a cheaper option. With proper financial planning, one can meet his objective of financing child education without much of a problem. Financial literacy/planning therefore become critical from child education standpoint. In deciding about the course the child will pursue as he/she progresses, it is necessary that the parents must observe, discuss with the child and plan at the earliest. Therefor following aspects need attention:

• Planning for schooling/ higher studies
• Planning for Finance

Planning for schooling/higher studies

The child when starts going school starts learning. With passage of time, the child starts developing interest in various areas. As the child grows his interests turn into a passion and this is the time when the parents with their intelligence, observations and their experience must identify his interest areas and discuss with child suggesting available options that may be suitable for the child. First time interaction may not give clarity but gives an idea for both the parent and child on which they can brood over and may discuss in more details in their second discussion. Most likely the final option is not clear, but in the third or fourth discussion clarity may be seen, and this is the time when as parent you may be in a position to conclude the direction, the child wants to pursue. The planning must start as soon as both the parents and the child agree for the final path. Parents must always give precedence to child’s view rather than their own wish. Don’t try to enforce your wish on the child because that may not be the best and the one the child wants to pursue. Today there are number of options available in every field, so don’t undermine option the child wants. As parent it may be better idea to encourage may be with some modifications, so that the child pursues the line he/she wants to pursue and excels in that line. It may be whether child wants to go abroad for higher studies or wants to go for higher study within the country or wants to study for competitive examination or something else.

Anyway, as soon as the line to be pursued is finalized, planning becomes important. For planning, the responsibility lies more with parents, to explore, identify, examine and of course finalize in consultation with the child so that everything is the best and in line with your plan.

Planning for Finance

Finance is the deciding factor, particularly if there is some financial constraints. Planning therefore becomes very important. The question comes wherefrom the financial resources will be organised, how the funding for the child education will be carried forward.

In case one is already saving or has a habit of saving, he may not have much of a problem otherwise there may be financial crunch. With proper planning ,he must be building a corpus for child's future studies. If he has not done enough savings and time is there, say around 10 years or more, they can still start saving now with various saving options and have sufficient amount when it is needed.

All possible funding options need to be evaluated and in case the loan or borrowing is the only option left, even for that proper evaluation i.e. how much to borrow, the period and the amount needs to be clearly understood. Do not jump on any option without proper evaluation. One can visit various Banks’ website or other money lender portal. One should also examine P-2-P (Peer to Peer) option as well, as this platform is supposed to provide the cheapest interest rate, but one must examine it carefully. Various websites/portals are available which can be used for understanding the loan implication i.e. if X amount is borrowed at y %interest for n number of years then how much monthly installment need to be paid for how many years. These are good guides for the individual to understand what option he/she should select.

Thus one can understand the need and importance of Financial Literacy. Financial Literacy helps in each and every aspect of life. Therefore one should always be open to learning and particularly the financial aspect of the subject.