How to Manage Financial for Children’s Education

http://indahkeluargaku.blogspot.com/2012/04/how-to-manage-financial-for-childrens.html

Financial planning which is effective and efficient would be completely needed in order to prepare the long-term financing in a household. The perfect financial planning is necessary to anticipate the unpredictable things may occur from time to time. Additionally to anticipate unwanted emergencies situations, financial planning is also required to prepare children’s education expenses.

As well-known, it would be needed several years to complete educational levels. Starting with elementary school and then proceed to several levels higher until reach the college, preparing the perfect financial planning should be initiated as earliest as possible. The illustrated situation bellow can help parents to calculate the amount of educational investment must be spent for their children’s education expenses.

If this time parents want to make their children studied at junior high school with receipts of 1000 and the educational monthly school payment of 50, then the next 3 years it will need 2800 or 930 each year or 77.5 each month. Now let’s compute the amount of money needed if our children will attend at the junior high school in the next five years, while the amount of investment money prepared from now, to have better financial planning. In other words, the cost of 2800 for 5 years to come, we invest from now on.

How to calculate the estimated future costs each year can be used the formula:  cost now x (1 + inflation) ^{investment periods}. Assuming that inflation is 10% each year, the each year future cost would be: 930 x (1+10%) ⁵ = 1497 each year or 124.75 each month. This certain value has to be prepared by the parents to avoid several problems might be occurred for their future children education expenses. Obviously, perfect education financial planning must be initiated by parents as soon as possible.