# Education Planning Calculator

₹ 33,98,632

## What is Child Education Planning?

The cost of higher education is rising in India. You must plan for the expense when the child is still young. It gives you the time to accumulate a substantial amount of money when the child reaches college. You must choose the investment that offers return above inflation over some time. Invest your money based on your risk appetite to accumulate the corpus for your kid’s higher education. You can stick to a relatively safer financial instrument such as PPF or the NSC to collect money for your child’s higher education. However, an aggressive investor may choose to invest in equity-oriented investments that offer an attractive return on investment over the long-term. The higher return offered by equity funds can reduce the amount of saving you set aside for your children’s education. Invest in equity based on your risk tolerance and start investing when the child is three to five years of age. You must calculate the amount you need for the child’s education as early as possible. It gives you the time to select the right investment and collect the money to send your child abroad for higher education.

## What is a Child Education Planning Calculator?

The child education planning calculator is a utility tool that allows you to plan your investments for meeting the educational needs of your children in the future. The calculator has a formula box, where you enter the current cost of education, the expected rate of inflation, the current age of your child, and how old your child would be when you need the money. The child education planning calculator shows you the future cost of your child’s education in seconds. The child education planning calculator goes a step further and shows you the monthly savings you must set aside to meet the financial goal. You will have to enter the expected return on investment and any amount set aside for the financial goal.

## How Does Child Education Planning Calculators Work?

The child education planning calculator uses the concept of future value and calculates the accumulated corpus at the time of the child’s higher education. You will have to use the formula: FV = PV (1+R)^N FV = Future Value PV = Present Value R = Rate of return on the investment N = Duration or time-frame of the investment. For example, the current age of the child is three years. The age of the child at the time of college education would be 18 years. You estimate the current cost of higher education at Rs 8 lakh. Assume an inflation rate of 6%. The child education planning calculator will calculate the future cost of education as: PV = 8 lakh R = Inflation rate of 6% N = Child’s age at the time of college education – present age of the child = (18-3) = 15 years. FV = 8,00,000 (1+0.06)^15 = Rs 19,17,247. You require Rs 19,17,247 during the time of the child’s higher education. Let’s calculate the savings you must set aside each month to accumulate the requisite corpus. You have currently not saved any money for the child’s higher education. Let’s consider the expected rate of return on the investment at 7% per year. You may use the PMT Function in the Excel calculator where you enter the rate = 7/100/12. (Convert to monthly rate). You must calculate the period of investment in months = 15*12 = 180 months. Put PV = 0 and FV as per the earlier calculation = Rs 19,17,247. The child education planning calculator shows you the investment required per month for the child’s higher education as Rs 6,049.

## How to Use the ClearTax Child Education Planning Calculator?

The ClearTax Child Education Planning Calculator is an easy-to-use tool for calculating the future cost of a child’s higher education.
• You must enter the present cost of education.
• You then fill up the expected inflation rate.
• Enter the current age of the child and the child’s age at the time of higher education.
• The ClearTax Child Education Planning Calculator will show you the future cost of the child’s higher education.
• If you have already invested some money for the child’s higher education, you must fill up that amount.
• You then fill the expected rate of return on the investment.
• The ClearTax Child Education Planning Calculator will show you the investment required per month to meet the child’s higher education.

## Benefits of using the ClearTax Child Education Planning Calculator

• The ClearTax Child Education Planning Calculator shows you the amount you need for your child’s higher education, right now. You can accumulate the corpus based on your time horizon and risk profile.
• You get an idea of the money you must collect to send your child abroad for higher education.
• The calculator helps you to select the best financial instruments to achieve your financial goal.
• You get to know the amount of money you must save every month to cover the future cost of the child’s education.

## FAQs on the ClearTax Child Education Planning Calculator

• How does the ClearTax Child Education Planning Calculator calculate the future higher education costs?
The ClearTax Child Education Planning Calculator asks you for the current cost of higher education. You must fill the inflation rate for the period from the current age of the child up to the age at which you require the money. The calculator will show you the future cost of higher education, based on the rate of inflation.
• Why does the ClearTax Child Education Planning Calculator ask if you have already saved for a child’s education?
The ClearTax Child Education Planning Calculator uses the future value concept to calculate the accumulated corpus for the kid’s higher education. If you have kept aside some money for the financial goal, the calculator takes into account the return on investment over the time-frame. You will reach the financial goal much earlier as compared to a zero investment.
• Is ClearTax Child Education Planning Calculator easy to use?
The ClearTax Child Education Planning Calculator shows you the future cost of your child’s higher education. You also get an idea of how much to save each month to meet the financial goal in seconds. The calculator is user friendly, and you just need to input the requisite information.
• Why use the ClearTax Child Education Planning Calculator?
You must earn a return above inflation for the long-run, to accumulate a sizable corpus for your child’s higher education. The ClearTax Child Education Planning Calculator helps you to calculate the future cost of higher education for different assumed inflation rates and time horizons. You can choose the best investments based on your risk profile and reach the financial goal.