Why Your Child’s MBA Fund Needs to Start Before They Turn 10
- Samrat Investments
- Apr 12
- 3 min read
The Uncomfortable Truth About Education Costs
Most parents dream of giving their children the best education possible, but few truly grasp the staggering costs associated with higher studies—especially an MBA from a top-tier institution. If you think setting aside savings in your child’s late teens is enough, you’re in for a rude awakening.
The cost of an MBA has skyrocketed over the last few decades, with tuition fees at top institutions like Harvard, Stanford, and INSEAD exceeding $200,000. Factor in inflation, living expenses, and lost income during those two years, and you’re looking at an education bill that could surpass $300,000 by the time your child is ready for grad school.
Yet, most parents only begin to think about funding an MBA when their child is already in college—by then, it’s often too late.
The MBA Savings Mistake Most Parents Make
Many parents operate under the assumption that scholarships, student loans, and their existing savings will be enough to cover an MBA. The reality?
Scholarships for MBA programs are highly competitive and limited.
Student loans for an MBA are hefty and can leave your child burdened with debt well into their 40s.
Traditional savings approaches rarely match the inflation rate of education costs.
By waiting until your child is in their late teens to start thinking about an MBA fund, you lose out on the single most powerful financial tool: compounding.
Why You Must Start Before Your Child Turns 10
1. Compounding Needs Time to Work Its Magic
If you start saving just $200 per month from the time your child is born, assuming an 8% annual return, you could amass nearly $100,000 by the time they turn 18. However, if you start at age 15, you’d need to save around $2,000 per month to reach the same amount—something most families simply can’t afford.
2. Inflation Will Crush Future You
At a 5% annual increase, the cost of a $200,000 MBA today will balloon to nearly $500,000 in 20 years. If you start early, your investments have time to grow with inflation. If you delay, you’ll be fighting an uphill battle.
3. Your Child’s Financial Future Starts With You
A debt-free MBA means your child can focus on career growth instead of loan repayments. The psychological and financial freedom this provides is invaluable.
4. Building Financial Discipline Early On
Starting early helps parents develop a disciplined investment strategy while also instilling financial awareness in their children. When kids see their parents actively planning for their education, they’re more likely to develop healthy money habits themselves.
A Realistic Plan: How to Start an MBA Fund Today
Step 1: Choose the Right Investment Vehicle
529 Plan (If in the U.S.) – Offers tax advantages for education expenses.
Mutual Funds or Index Funds – A solid, long-term growth strategy.
PPF (If in India) – A safe, tax-free investment with guaranteed returns.
UTMA/UGMA Custodial Accounts – Allows you to invest in stocks on your child’s behalf.
Step 2: Automate Savings
Set up an automatic transfer from your paycheck to the MBA fund. Start with what you can afford—even $100 a month compounds over time.
Step 3: Increase Contributions Gradually
Each year, increase your contributions in line with your salary growth. Even a 5–10% annual increase in your savings can make a huge difference over time.
Step 4: Teach Your Child About Investing
As your child grows, involve them in financial discussions. Show them how their MBA fund is growing and teach them the basics of investing. This ensures they value the opportunity when the time comes.
The Bottom Line
A world-class MBA is not just about education—it’s an investment in your child’s future success. Starting early ensures you give them a financial head start without compromising your own retirement or financial stability.
The question is no longer should you start an MBA fund before your child turns 10—it’s can you afford not to?
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