It is an aspiration for so many students worldwide to get higher education from abroad. Some of the most popular education destinations are the UK, Canada, Australia, and Singapore. To turn this aspiration into reality, parents must set aside funds for their children’s education from very early on. Financial planning is key to making your child’s education abroad plan successful. Study abroad education consultants can provide in-depth guidance customized according to your financial situation and goal. In this blog, we have discussed the entire strategy to achieve the goal of sending your child abroad for education.
Financial planning strategy to fund your child’s abroad education
1. Gain an understanding of international currency.
Before you get down to planning, understand the currency, exchange rates, etc. of the country you are planning to send your child for education in the future. The cost of living, average tuition fees, etc are different in every country, so having a basic knowledge of the country’s economy is helpful.
2. Estimate the probable cost of higher education abroad.
Do not just consider the education fees to create a financial plan. There is also a massive cost of living in foreign countries, which includes rent, transportation, electricity, food, and other utilities. Your final estimate should include all of this and a buffer amount to be safe. Tuition fees differ significantly in every country and depend on the course and university your child will be going to.
To figure out a rough estimate, you can visit different universities and check the tuition fees for every course. You can either take the maximum figure or an average of nearby figures. There are also many tools, like international student financial calculators, that provide estimates for different scenarios. To figure out the living expenses associated with education abroad, you can take 2-3 countries and research the average rent, transportation cost, price of groceries, and other utilities with miscellaneous expenses.
3. Consider inflation.
While creating a financial goal, consider the destination country’s inflation rate. For instance, if your child will move abroad in 2040 as per your calculation, and you are making a financial plan in 2025, you need to account for the inflation in costs of tuition fees, living expenses, etc. that will occur by 2040. If you skip this step, your cost estimate will be far from the actual expense incurred for your child’s education abroad. So, this step is necessary for foolproof financial planning.
4. Create a long-term financial plan as per the estimate.
Now that you have a financial goal, create a foolproof plan to achieve it and execute your financial plan thoroughly. Study abroad education consultants can provide tailored advice that fits your financial strategy perfectly. To achieve your financial goal, follow the steps given below:
5. Arrange different sources of funds.
Education loans might be on the top of your mind but try to source funds from your capital first. Reduce expenses wherever you can and keep a check on your spending habits. You can create a savings goal for yourself every month and allocate those funds to your child’s education plan. Applying for education scholarships and grants for international students is another great way to arrange funds. Some scholarships cover partial or even entire tuition fees. Government grants for international students sometimes include living expenses too.
Research the different need-based and merit-based scholarships from universities, government scholarships, scholarships from private institutions, and non-profit organizations. It can provide you with an estimate of to what extent you can lower your financial goal. Keep an education loan as a last resort. You can explore the rates at which different institutions, like your country’s government, international financial institutions, banks, etc. provide education loans. Compare the repayment terms, interest rates, eligibility criteria, etc. of all these institutions for education loans. Keep the amount of loan you are taking as low as possible since if you are unable to repay it, a huge financial debt can impact the future financial security of your child.
6. Diversify your portfolio.
Savings alone are insufficient to achieve a financial goal like sending your child abroad for education. Have a strategic investment plan that includes mutual funds, SIPs, fixed deposits, PPF, education savings plan RD, stocks, etc. Avoid putting a huge chunk of money into a single investment. Allocate funds to different plans as per the risk-to-return ratio.
Research the different investment strategies and deep dive into every strategy to see which plans will work the best for you as per your goal. Set a fixed amount that automatically gets debited from your salary or savings account at the beginning of every month towards these different investments. Set an amount you are comfortable with and can stick to in the long run.
7. Minimize possible risks in your investments.
Since education is a long-term financial goal, approach with a less risky approach to your investments. For instance, investing in mutual funds is way safer than individual stocks. But this is not to say that you should completely shy away from taking risks in your investments. All you have to do is keep the proportion of risky investments lesser than the safe options.
For instance, if you have done your research on a particular company, and you are confident that this company will grow in the next 10 years, you can go ahead and invest. If you make a considerable return from a risky investment, accumulate the amount and put it into debt mutual funds or savings accounts. It will ensure that you do not lose any of the profit you have earned from your investments.
8. Review your investments periodically.
Do not just invest your money and forget about it. Review your investments every quarter or half yearly and assess what is working and what you should change about your investment strategy. If any of the investments are not giving returns according to your estimation, it can put you behind in achieving your financial goal. So take out that fund and invest it into a better option. Periodic assessments are crucial for staying at the top of your investment game.
9. Analyze the different insurance plans and select the one that fits your financial plans.
Figuring out our child’s health insurance plan is of utmost priority to send your child abroad for education. It is a mandate in every international education destination and is essential for your child’s well-being. You can purchase a health insurance plan directly from the university or the different private insurance companies that sell insurance plans to students. Compare insurance plans of different universities and private insurance plans to determine the best fit according to your financial strategy. You can even consider a student travel insurance plan in your financial planning to protect your child from unpredictable financial emergencies.
Sending your child abroad for higher education is a massive financial goal. It can only be achieved if you plan early enough and stick to your financial strategies throughout the years. You can consult Education Consultants for a more strategic plan that deep dives into all the nitty gritty.