6 Common Mistakes in Preparing Education Funds
Not everyone is able to prepare their children's education Fund well. Therefore, entering the new school year, the high cost of education also often makes the headache of those who have schoolchildren. In fact, if prepared with maturity, will help the children to be able to enjoy a quality education.
Good education is believed to help someone achieve goals and improve the future. Therefore, prepare the Education Fund from the far-distant day. However, even though it has already prepared an early education fund, there is still often an error. The mistake resulted in the need for education not fulfilled.
Well, approaching the season of rising class as of now, try to learn from mistakes. Here are 6 mistakes that often occur in preparing the cost of education:
Wrong calculating the inflation of education funds
What is often forgotten when preparing education funds is to calculate inflation. Considering education funds are some of the funds or costs to be used in the future, it is important to account for the value of inflation growth.
Tuition will be increased annually. Education cost inflation can be higher when compared to the inflation of basic material needs. Some private schools even raise the cost of the base up to 20 percent per year. So, it's important to really know what education inflation actually is the regulation of every school.
To make sure, you can inquire directly with the administration of the dream school, even if the new child will attend school for the next 5 years. If the school policy is not aligned with financial capability, then we should be more realistic in making an education fund plan.
The calculations will be much more complicated if you want to continue your education abroad. In addition to calculating the cost of education inflation, you should also consider the rupiah exchange rate against the local country currency and do not forget to calculate the cost of living in the country.
Not accepted in the School of Dreams
Not a few parents have favorite public schools as a dream school for their children, with consideration for funds that need to be prepared will be smaller than the private school.
However, the child may not be admitted to the school, so there must be a large additional fund if they want to enter a private school that is assessed as equal in quality. Therefore, the preparation of education funds for children should be made with the highest possible calculation among the favorite schools. So if it is not accepted at the first option we have the adequacy of funds to continue in other schools.
Wrong choosing investment instruments
Various investment instruments can be used as an alternative to the Education Fund of children in the future. Investment instruments have different returns in accordance with the time period. The need for short-term investments is certainly different from the long term.
The common mistake is that the investment instrument that should be allocated for the short term investment is aimed at the long term needs so that the results are not maximally, and vice versa.
Using only one type of investment instrument
Education Fund plans for each child should be separated. Besides the needs of each child is different, the investment period is also different. With the separation of the preparation of education funds for each child, the parents will also be easier to do the calculation of the investment needs per month.
The separation of Education fund preparation for each child will facilitate you in choosing the appropriate investment instrument and evaluate its development well. There are also several financial products that are designed to prepare children's Education Fund for example, the savings of futures education, deposits, education insurance, mutual funds or other.
Not preparing early
The most common mistake is to feel that you always have time to prepare for education funds, so that it is finally too late. Even with an early investment, the funds that can be set aside can be very affordable.
However, unfortunately there are still a lot of parents who suddenly raise tens of millions of money or even owe for his son to continue education to the next level.
Choosing an inappropriate time
Sometimes there are old people who determine the estimate between the time and cost required. When determining the approximate time, it needs to be adjusted to the current child's age. If the child is a baby or 0 years old, then at least five stages of time should be considered.
Consider the entrance fee of playgroup and kindergarten (three years), this cost requirement can use medium term investment. To enter elementary school, you can also invest in the medium term. As for the need for admission and JUNIOR High, or college, you can choose investment for the long term.
You as a parent need to set this time period so as not to bother later and choose the right investment instrument in accordance with the financial objectives.
The spirit of preparing the Education Fund for a glorious future!