Beyond college funds: Why parents need to invest for a skills-first future

Skills in fields like artificial intelligence, cybersecurity, digital marketing, and data science are growing exponentially.

The world of work is shifting, and so should our approach to financial planning for our children. While education funds have been the default vehicle to secure our children's future, it’s time to expand that vision. Investing in skill-building can not only boost employability but also offer a quicker, more adaptable return on investment. Here’s why and how parents should consider pivoting to a skill-based investment strategy that can pay dividends for their children's future.

Degrees are yesterday’s gold, Skills is today’s currency

It used to be that a college degree was the golden ticket to a stable career. But today, employers are looking beyond traditional qualifications, searching instead for hands-on skills in high-demand areas like coding, digital marketing, data analysis, and artificial intelligence. A college degree alone is no longer enough to stand out; the job market favours candidates who bring immediate, practical value.

From a financial standpoint, skill-based learning is often quicker and more cost-effective than a full-fledged degree program. Rather than spending years—and huge sums of money—waiting for the payoff of a college degree, skills training can open doors to lucrative opportunities in a matter of months. For parents, this means that funding skills-based learning can be like planting seeds that will yield faster, more reliable returns.

Micro-investing in skills: Small sums, big potential

Think of skill-based investments as a series of small, strategic bets rather than a one-time financial windfall. Just as in stock portfolios, diversification is key. By allocating small amounts in funds suitable as per risk appetite and time horizon toward targeted, high-impact skills, parents can create a diversified “talent portfolio” for their children.

Imagine allocating a fraction of your education fund towards a coding bootcamp or a digital marketing course. Not only is this a relatively low-risk, short-term investment but it also equips your child with market-ready skills that employers crave. Skills-focused investments offer the added benefit of adaptability; they enable your child to pivot between careers or industries as the job market evolves.

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Striking the perfect balance: Blending traditional and skill funds

Why choose between a college fund and a skill fund when you can have both? Rather than a zero-sum choice, consider a “hybrid” model—one that retains the stability of a traditional college savings plan while building in the flexibility of a skills-based fund.

This strategy might look like allocating a modest percentage of your overall savings—say 10-15 percent—toward skill-building programs. That Rs 1 lakh set aside in a dedicated fund for skill building for a data analytics course might, in some fields, lead to lucrative internships or entry-level jobs immediately upon completion. Meanwhile, the rest of the education fund can stay committed to traditional university goals. A hybrid fund, in essence, is a plan that secures both the foundation and the edges, giving your child a toolkit to thrive in the real world.

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Skill goldmines: Where the financial returns are brightest

Not all skills are created equal. Some industries offer higher returns, greater stability, and more rapid advancement. Skills in fields like artificial intelligence, cybersecurity, digital marketing, and data science are growing exponentially. For parents, this translates into a high-value investment area, as these skills are more resilient to economic downturns and future-proofed against job market disruptions.

Investing in these high-demand skills is akin to buying into the “blue-chip stocks” of the job market. The ROI isn’t just financial—it’s also about stability, adaptability, and a level of job security that traditional roles may not provide. Children armed with these specialised skills enter the workforce not as novices but as valuable assets who can hit the ground running.

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Building the dual financial arsenal: SIPs and skills

The idea of a dual financial arsenal isn’t as intimidating as it sounds. Start with a systematic investment plan (SIP) in a suitable fund to build a stable foundation for your child’s traditional education. This portion of the fund acts as the bedrock, ensuring that college aspirations remain achievable. Then, create a secondary, flexible skill fund—a more agile pool of resources dedicated to short-term, high-impact courses. For this, you can park your money in a suitable fund. It varies from case to case. Equities for long term with high risk, hybrids for medium to long term with moderate risk.

This secondary skill fund can be dynamic; its allocations can be adjusted as your child’s interests and the job market evolve. For instance, if your child develops an interest in data science, a quick reallocation of resources toward a data analytics workshop could provide a valuable head start. This approach not only builds financial security but also offers your child the freedom to experiment and find their passion.

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Actionable steps for parents: Making the move to skill-based investments

Survey the skillscape: Start by researching in-demand skills. Look for those that align with future job trends, such as artificial intelligence, digital marketing, and data science. Choose courses with a proven return on investment, focusing on those that offer practical training and certification.

Flex your financial plan: Designate a portion of your education savings for skill-based learning. This doesn’t have to be a drastic split—consider a modest allocation that gives you room to adjust as needed.

Blend stability with agility: Traditional education funds provide long-term stability, while skill-based funds offer short-term career readiness. Create a balance that maximises both, ensuring a solid educational foundation while keeping up with market demands.

Stay in the know: Keep an eye on emerging job trends. Adjust allocations if needed to keep your child’s skill set relevant to industry changes and future-proofed.

Look beyond just earnings: Skill-based learning isn’t just about money. Consider the intangible benefits: resilience, adaptability, confidence, and the ability to learn independently—all traits that are crucial for success in today’s fast-paced economy.

The ultimate strategy: Empowering a resilient generation

In an era where careers are increasingly fluid, financial planning for our children must evolve. A dual approach—balancing college funds with targeted skill investments—ensures that children are well-prepared for both traditional career paths and the rapidly evolving industries of the future. By blending long-term education funds with agile, skill-based investments, parents can provide their children with not just the security of education, but the versatility to thrive. This approach ensures that they are not merely participants in the job market but valuable, adaptable players ready to seize opportunities as they arise.

The writer is co-founder at EduFund.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.