For salaried parents, child education is one of the most emotional financial goals. The challenge is that the goal is far away, the cost is uncertain, and education inflation can make today’s estimate look small.
Start with today’s cost
Pick a realistic current cost for the type of education you want to plan for. This could be undergraduate studies, professional education, overseas study, or a broader education fund.
Apply education inflation
Education costs often rise meaningfully over time. If a course costs a certain amount today, the future cost can be much higher by the time your child reaches college age.
Use current savings first
If you already have savings for the goal, include them. Existing savings reduce the monthly SIP needed, especially when the goal is many years away.
Turn the gap into a monthly SIP
Once you know the future cost and current savings, calculate the monthly investment needed to close the gap. This number is more useful than a vague target because it connects the goal to monthly salary.
Increase SIP after salary hikes
A step-up approach can help. If income rises every year, increasing the education SIP slowly may be easier than starting with a very high contribution today.
Review the goal every year
Education plans should be reviewed yearly. Costs, currency, course choices, investment returns, and family priorities can all change.
This article is for educational planning only and is not investment advice.