With over 40 years of experience as a financial advisor, I’ve seen firsthand the importance of starting to plan your the education of children from the day they’re born. While many parents are committed to providing the best education possible, they often unde restimate the true costs — ultimately risking their own financial security.

Why education planning matters

Investing in your child’s education goes beyond securing their future—it benefits society as a whole. An educated population fuels innovation, drives economic growth, and promotes social progress. By prioritizing education planning, you’re not only empowering your own child but also contributing to the advancement of your community and country.

The Pitfalls of not planning

In their determination to provide the best education, many Indian parents find themselves in a tough spot – they have to dip into their life saving retirement kitty to cover soaring education expenses. This leaves them dependent on their kids later in life, or forces them to keep working into their golden years instead of enjoying retirement.

But it doesn’t have to be this way. By starting education planning early, you can give your child every opportunity without jeopardizing your own financial security.

Outpacing educational inflation

One of the biggest reasons to plan ahead is the staggering rate of education inflation in India. While general living costs rise about 6% per year, education expenses can skyrocket by 10-12% annually. This “educational inflation” compounds quickly, making it hard to keep up without proactive saving.

For example, today’s preschool costs of ₹1.5 lakh could balloon to ₹3.8 lakh in just 10 years at a 12% inflation rate. Throughout your child’s educational journey, these exponential cost increases can become unmanageable if not addressed early.

As the child is just born, it’s impossible to know what path they’ll choose in the future. Whether they choose to pursue higher education or not, it’s important to be prepared for all possibilities. By planning ahead, you can ensure your child has the resources they need to follow their dreams, whatever path they may choose.

Accessing top institutions

Lack of education planning can also limit your child’s options when it comes time for college. Without enough savings, you may have to settle for less prestigious institutions, either in India or abroad. But with a robust education fund in place, you can open the door to India’s top universities, as well as esteemed international programs.

This not only provides an exceptional learning experience, but also enhances your child’s future career prospects. The long-term benefits of an elite education can pay dividends for decades to come.

The power of SIPs

The best way to tackle rising education costs is to start a Systematic Investment Plan (SIP) in mutual funds as soon as your child is born. Even a relatively modest ₹20,000 per month, with a ₹2,000 annual top-up, can grow to over ₹1.05 crore by the time your child finishes 12th grade.

Invested at a 10% annual return, this education corpus will more than cover tuition, accommodation, and other expenses at India’s top colleges and prestigious international institutions. And you’ll still have a sizable amount left to support your child’s future goals and aspirations.

Securing your child’s dreams

Education is one of the greatest gifts you can give your child, but the financial burden can be daunting. By starting your planning on day one, you can ensure that this cost doesn’t become an insurmountable obstacle to their dreams and ambitions.

Through disciplined saving and strategic investment, you can build an education fund that opens up a world of boundless opportunities for your child. You will also have the peace of mind that their future—and your own—are secure. This Children’s Day, let’s commit to investing in the success of the next generation

The author, Sandeep Gandhi CFPCM. is the CEO of Mega Financial Services with vast experience in financial services for over 35 years. He can be reached at coe@megafina.in or on 98250 78399.

Note: This is a partnered post.