Why education is planned differently
Two features set education apart from every other goal. The date is fixed years in advance and cannot be postponed, and the cost has historically risen faster than general inflation — which is why the default assumption here is higher than the six per cent used elsewhere.
Together these mean the money has to be there, in full, on a known date. That rules out leaving the whole amount in equity right up to the admission year.
A workable approach
- Start when the child is young. The gap between starting at four and starting at ten is usually the difference between a comfortable monthly figure and an uncomfortable one.
- Keep the education corpus separate from general savings, so it is not quietly spent on something else.
- Begin moving the accumulated amount into safer instruments about three years before the course starts.
- Insure the earning parent adequately. An education plan that depends on an income should not fail because the income stops.