How to Plan Financially for Your Child’s Education

Every parent wants their child to get the best education. Whether it’s a top college in India or a university abroad, the dream is big and so is the cost. 

A good education is no longer just about clearing entrance exams or filling out forms. It needs financial planning, just like a house purchase or retirement. The earlier you begin, the smoother the ride. Because once your child reaches the college gate, your savings shouldn’t be the reason they turn back. 

Let’s walk through a simple approach to planning for this goal. No jargon. Just practical steps that work in real life. 

Start with clarity 

First, ask yourself what exactly you are planning for. Is it a private undergraduate course in India? Or a four-year international degree? Or both? 

Get a rough sense of: 

• Years left until the expense begins 

• Current cost of that education 

• Inflation on education, which is higher than general inflation 

If a course costs 25 lakhs today, in 10 years it may cost 45 to 50 lakhs. That’s the number you must plan for — not today’s number. 

Set the target 

Now put a number on it. Say your child is 6 years old, and you expect to need ₹40 lakh by the time they turn 18. That gives you 12 years. 

Use a goal calculator or a simple SIP calculator to know how much you need to invest every month. You’ll find that even ₹10,000 to ₹15,000 monthly can go a long way if you start early. 

Don’t depend on loans 

Education loans are useful, but they should be your backup plan, not your first plan. 

Banks lend only after checking admission, university reputation, and co-borrower strength. And loans come with interest and repayment stress often falling back on parents. 

If you can build at least 70 to 80 percent of the amount yourself, the burden reduces. And your child can focus more on studies, less on repayment. 

Invest, don’t just save 

Many people save for education using FDs or recurring deposits. That’s safe, but not enough. Because education inflation is higher than FD returns. 

You need your money to grow faster than the cost of education. That means investing in growth assets like mutual funds or stocks, not just saving money in the bank. 

Use a mix. For goals more than 7 years away, go for equity mutual funds or index funds. For goals less than 3 years away, shift gradually to safer options like short-term debt funds or savings accounts. 

Use a separate account or folio 

Don’t mix your child’s education goal with other investments. Keep a separate folio or account where only this money is gone. It helps track progress and avoids unplanned withdrawals. 

Every time you get a bonus or a salary hike, top up this account. It adds years of momentum to your goal. 

Protect the plan 

Even the best investment plan can go off-track if something happens to the earning member. That’s why you must cover this goal with term insurance. 

If something happens to you, the insurance payout should be able to take care of the education fund. 

Also, make sure your health insurance is active. Hospital bills should not be eaten into education savings. 

Don’t delay 

Many parents delay this because they think college is far away. But the later you start, the more pressure you’ll feel. 

Look at two cases: 

• If you start 10 years early, you may need ₹8,000 per month 

• If you start 5 years before college, you may need ₹25,000 per month 

Starting early gives your money time to grow. And your child’s dreams have more room to breathe. 

Think global, plan local 

If you’re aiming for overseas education, add 20 to 25 percent more every year for currency movement. And understand that tuition is only one part living costs, travel, insurance, and visas also add up. 

Start building that fund in Indian rupees. If needed, switch to international feeder funds in the last 2 or 3 years. But don’t jump in without knowing the risks. 

And make sure your child knows what to expect academically and financially. 

Talk to your child 

As your child grows, include them in basic conversations about cost and planning. It builds awareness. They’ll be more responsible when they know the effort behind it. 

Let them know that education is not free. But with planning, it doesn’t have to be stressful either. 

Avoid these traps 

1. Don’t rely only on traditional insurance plans. Most of them give low returns. 

2. Don’t break your retirement savings for education. Your child can get a college loan. You cannot get a loan for retirement. 

3. Don’t stop midway. Even if markets fall or things get tight, try to stay on track. 

As Benjamin Franklin once said, “An investment in knowledge pays the best interest.” 

How to get started today 

1. Decide the target amount and year 

2. Open a separate investment account or folio 

3. Start a SIP in an equity mutual fund 

4. Set reminders every year to review the progress 

5. Use bonuses or extra income to boost the fund 

This is not about chasing returns. It’s about reaching the right amount at the right time. 

To sum up, planning for your child’s education is not just a financial move. It’s a gift of freedom. The freedom to choose the right course, the right college, and the right future. If you want help in selecting the right investments, building discipline, and making sure your plan is safe from shocks, we at Maxiom Wealth can help. 

We follow the Roots and Wings philosophy — selecting strong companies with healthy financials and growth momentum for long-term wealth building. 

And we use the LSG approach — Liquidity, Safety and Growth — to match the right assets with the right goals. Education is one of the most meaningful goals in life. It deserves the same level of planning and care. 

Start today. Your child’s future is worth every rupee and every step.