As parents, you carefully plan every aspect of your child’s life, from school admissions and hobbies to health and everyday routines. But one of the most important responsibilities that often gets delayed is planning for your child’s education expenses.
What many parents don’t realise is that education inflation in India is far higher than general inflation. For higher education, costs often rise at 10%–12% annually, nearly double the general rate. This means that what feels affordable today could become overwhelming tomorrow if planning is delayed.
Here’s a practical guide to help you plan your child’s education and fund higher education in a structured manner.
Why Child Education Planning Can’t Be Delayed
Over the years, education in India has become significantly more expensive, placing a growing financial burden on households.
In FY12, Indian households spent about ₹1.8 lakh crore on education. By FY24, this figure rose sharply to ₹8.43 lakh crore, a 4.6x increase in just 12 years. On an individual level, per capita private final consumption expenditure (PFCE) on education increased from around ₹1,500 in FY12 to nearly ₹6,100 by FY26.
The table below shows how common education and life milestones grow when projected at a 10% education inflation rate.
Milestone | Time Horizon (from child’s birth) | Current Estimated Cost | Projected Future Cost (15 years @ 10% inflation) |
Higher Education (B.Tech / MBA) | 18–22 years | ₹15,00,000 | ₹62,60,000 |
Marriage/Seed Capital | 25+ Years | ₹10,00,000 | ₹1,08,35,000 |
Specialized Coaching/Course | 10 Years | ₹5,00,000 | ₹12,96,000 |
A higher education expense of ₹15 lakh today can exceed ₹60 lakh over time, while even mid-term goals, such as specialised courses, can more than double. This is why child education planning should focus on the entire financial journey, not just one milestone.
How Much Should You Invest Every Month for Your Child’s Education?
One of the most common questions parents ask is:
“How much should I invest every month to secure my child’s education?”
The answer depends less on the amount and more on when you start.
Time is the biggest advantage in education planning. Starting early allows smaller monthly investments to grow through compounding, while delaying increases the monthly burden significantly.
Below is the monthly SIP required to build a ₹1 crore corpus by age 21, based on the child’s current age.
Child’s Age (Years) | SIP Period (Years) | Monthly SIP Required (₹) |
0 Years | 21 Years | ₹10,000 |
3 Years | 18 Years | ₹14,000 |
5 Years | 16 Years | ₹18,500 |
8 Years | 13 Years | ₹28,000 |
10 Years | 11 Years | ₹38,000 |
12 Years | 9 Years | ₹53,000 |
15 Years | 6 Years | ₹97,000 |
Starting early keeps your monthly investments manageable. Even a small delay can significantly increase the amount you need to invest each month, as compounding works best when given more time.
Key Steps to Secure Your Child’s Education Future
Planning for your child’s education does not require complex calculations or large investments from day one. What it needs is clarity, consistency, and early action. Here are the key steps parents should follow to build a strong education plan:
1. Estimate Your Child’s Future Education Expenses
The first step is to move beyond today’s education costs and think in terms of future value. Since education inflation is significantly higher than general inflation, relying only on current fees can lead to serious underestimation.
Using an education cost or goal-based calculator can help you project how much today’s expenses may grow over time, based on inflation and the number of years left for your child’s higher education.
2. Assess Your Time Horizon and Risk Appetite
Your child’s age determines your risk capacity.
- Long horizons allow higher exposure to growth assets targeting 10%–12% returns.
- As the goal nears, gradually shift to balanced or debt-oriented options with 7%–9% expected returns to protect capital.
3. Priorities and Allocate Your Investments
Split your savings into two buckets:
Low-Risk Bucket:
Government-backed options like Sukanya Samriddhi Yojana (for a girl child) and PPF (for all children) provide stability and tax efficiency for predictable needs.
Growth Bucket:
For long-term education goals, invest via SIPs in equity-oriented mutual funds, aiming for 12%+ returns to stay ahead of inflation.
4. Increase Investments as Your Income Grows
Education costs rise every year, and so should your investments. Gradually increasing contributions as income grows helps maintain balance without straining finances. Even small step-ups can create a meaningful impact over time.
5. Review Your Plan Every Year
Your child’s goals, your income, and market conditions evolve. Review your investments at least once a year to track performance and make necessary adjustments, so your plan grows with your child.
For a detailed roadmap, download our free eBook:
Conclusion
Education costs are rising faster than most parents expect, making early and consistent planning essential. Starting now allows you to harness the power of compounding and steadily build a secure corpus for your child. Consult Ashvvy Investments to design a personalised education plan and confidently secure your child’s future.
