How Much Should You Really Save for Your Child's Education?

Higher education tuition fees have skyrocketed over the last decade, and the trend shows no signs of slowing. Your son or daughter may want to become an engineer, doctor, manager, or artist; however, nowadays, education is so expensive that it becomes a big issue. Let's see the average current fees for some popular courses in India:

• Engineering (4 years): ₹8–12 lakhs
• Medical (MBBS, 5 years): ₹50–80 lakhs (private), ₹5–10 lakhs (government)
• MBA (2 years): ₹20–25 lakhs (top institutes)
• Arts & Humanities (3 years): ₹3–5 lakhs
• Studying Abroad: ₹60 lakhs to ₹1.5 crores (including tuition, living, travel)

But tuition is just part of the picture. You also need to factor in other expenses such as:

• Hostel and living expenses: ₹1–2 lakhs per year
• Books and study materials
• Travel and miscellaneous costs

Now, add education inflation, which typically ranges from 8% to 12% annually. A course costing ₹10 lakhs today could cost ₹25–30 lakhs in 15 years. This makes saving based on today's prices highly unrealistic.

Case in point: A 4-year engineering degree costing ₹10 lakhs today could inflate to nearly ₹30 lakhs in 15 years at 8% inflation, and almost ₹40 lakhs at 10%. For a foreign degree, those numbers double or triple.

Understanding this future value is crucial, and that's precisely where the JezzMoney Education Planning Calculator can help you stay ahead.

When it comes to planning your child's education, time is your biggest ally, mainly due to the compounding effect. Compounding means your investments not only earn interest, but also your returns over time get reinvested. The sooner you do it, the more time your money will have to grow and generate interest.

Now, first of all, let us consider a simple example:

• Parent A starts saving when the child is 2 years old, targeting ₹30 lakhs by age 18.
  Monthly SIP required (assuming 10% return): ₹6,500
• Parent B starts saving when the child is 12 years old with the same goal.
  Monthly SIP required: ₹27,000

That's more than 4 times the amount for a 10-year delay! Such is the power (and the necessity) of compounding. The more time you give your money to grow, the less financial pressure you'll feel later.

Mini Infographic:

Even though the total amount invested might seem similar, the earlier you start, the lower your monthly burden, giving you more breathing room in your budget.

The key takeaway? Don’t wait. Use the JezzMoney Education Planning Calculator to find out how much you should start saving right now.

Understanding the future cost of your child's education can feel overwhelming, especially with rising inflation and multiple variables at play. Fortunately, the JezzMoney Education Planning Calculator simplifies the process by turning complex financial math into a quick and easy experience.

The calculator is designed for Indian parents who need clarity and accuracy in their educational planning. It considers your child's age, education targets, inflation, and expected profits from investments to work out two critical numbers:

• The probable cost of the planned education in the future.
• The amount of money that needs to be invested every month to cover that expense.

Let's walk through the key inputs you need to enter:

• 1. Child's Current Age: This determines how many years you have left to save. The younger your child is, the more time your investments have to grow.
• 2. Expected Age to Start College: Generally, around 17 or 18 for undergraduate studies. This allows the calculator to consider your time horizon for accumulating the required funds.
• 3. Type of Education: You'll need to specify the type of course—engineering, medical, MBA, arts, or foreign education—as each has different cost implications.
• 4. Current Cost of Education: Input the present-day cost of the chosen course. For example, an engineering degree might cost ₹10–12 lakhs today, while a foreign degree could be upwards of ₹50 lakhs.
• 5. Expected Inflation Rate: Education inflation is typically higher than general inflation, often ranging from 8% to 12%. A 10% inflation rate is a conservative average for projections.
• 6. Expected Investment Return: This is the annual return you expect on your investments. A 10% return is a reasonable assumption if you're investing in equity-based instruments like mutual funds or SIPs over a long duration.

Example Scenario

Let's assume the following:

• Your child is 5 years old today.
• They will begin college at age 18, giving you 13 years to save.
• The current cost of the chosen course is ₹10 lakhs.
• You assume a 10% annual inflation rate for education.
• You expect a 10% yearly return on your investments.

Once you input this data into the JezzMoney Education Planning Calculator:

• Projected Future Cost: The cost of ₹10 lakhs today will grow to approximately ₹33.9 lakhs in 13 years due to inflation.
• Monthly Investment Required: To accumulate ₹33.9 lakhs in 13 years at a 10% return, you'll need to invest approximately ₹8,300 per month.

Calculating future education costs and required monthly investments manually involves complex financial formulas:

• The future value (FV) formula: FV = PV × (1 + inflation rate)^years
• SIP calculation formulas to determine monthly investments based on time horizon and expected returns.

Most parents lack the time and background to handle this math accurately. That's why the JezzMoney Education Planning Calculator is so valuable — it provides instant, precise, and reliable results, helping you build a practical savings strategy.

It empowers you to start planning today, make informed adjustments along the way, and stay on course to meet your child's educational dreams — without the guesswork.

Once you have decided on the amount of money to be saved, the next step is to set realistic, sustainable goals that are based on your financial capacity. It is necessary to customize an education savings plan that is affordable for you, and this can only be done by considering your family's income, expenses, and the local economy.

As a general rule, allocating 10–15% of your monthly income toward your child's education can create a solid financial base. For instance, if your monthly income is ₹1 lakh, setting aside ₹10,000 to ₹15,000 for future education can help you build a strong financial foundation without straining your present lifestyle.

Some of the tips below will help you improve your savings plan:

• 1. Break Your Goal into Milestones: Splitting your goal into smaller yearly targets, rather than focusing on one significant figure (for instance, ₹30 lakhs), allows you to track your progress and remain motivated throughout the journey.
• 2. Start with an Achievable SIP: Start with a sum that doesn’t stress your budget, even if it’s less than the amount suggested by the calculator. The most important thing is consistency. You can always increase the SIP amount as your income grows.
• 3. Review and Adjust Yearly: Life changes—and so do returns, expenses, and inflation. Each year, use the JezzMoney Education Planning Calculator to update your plan based on the latest financial data or personal circumstances.

Indeed, education planning is not a one-time event; rather, it is a long-term habit. The more comfortable and consistent your approach, the more financially prepared you’ll be when the time comes.

Once you have decided on the amount of money to be saved, the next step is to set realistic, sustainable goals that are based on your financial capacity. It is necessary to customize an education savings plan that is affordable for you, and this can only be done by considering your family's income, expenses, and the local economy.

As a general rule, allocating 10–15% of your monthly income toward your child's education can create a solid financial base. For instance, if your monthly income is ₹1 lakh, setting aside ₹10,000 to ₹15,000 for future education can help you build a strong financial foundation without straining your present lifestyle.

Some of the tips below will help you improve your savings plan:

• 1. Break Your Goal into Milestones: Splitting your goal into smaller yearly targets, rather than focusing on one significant figure (for instance, ₹30 lakhs), allows you to track your progress and remain motivated throughout the journey.
• 2. Start with an Achievable SIP: Start with a sum that doesn’t stress your budget, even if it’s less than the amount suggested by the calculator. The most important thing is consistency. You can always increase the SIP amount as your income grows.
• 3. Review and Adjust Yearly: Life changes—and so do returns, expenses, and inflation. Each year, use the JezzMoney Education Planning Calculator to update your plan based on the latest financial data or personal circumstances.

Indeed, education planning is not a one-time event; rather, it is a long-term habit. The more comfortable and consistent your approach, the more financially prepared you’ll be when the time comes.

Although many parents may have the best of intentions, they still unintentionally fall into common financial traps, which ultimately affect their plans for their child's education. These errors in judgment can easily sabotage even the most carefully designed savings plans.

Here are some of the most common mistakes to avoid:

• 1. Not Accounting for Inflation: One of the most glaring mistakes parents make is not considering educational inflation, which can be as high as 8–12% per year. When planning is done based only on current prices, future needs will be grossly underestimated.
• 2. Relying Only on Low-Return Instruments: Parents tend to opt for "safe" options, such as fixed deposits or traditional insurance plans. Though the risk is low, their returns often fail to beat inflation, making it hard to build the required corpus.
• 3. Starting Too Late: The shorter the investment window, the less time compounding can work in your favor. This leads to higher monthly contributions and increased financial pressure as the education deadline nears.
• 4. Overestimating Scholarships or Grants: While scholarships can be a great help, they are uncertain and competitive. Banking on them for your entire education budget is risky—they should be considered a bonus, not the foundation of your plan.
• 5. No Plan B: Many parents overlook alternative options, such as studying in different countries or cities. These alternatives can drastically cut costs. Having a Plan B gives you more flexibility if circumstances change.

By avoiding these common pitfalls and using the JezzMoney Education Planning Calculator for realistic and flexible planning, you can take a huge step toward securing your child’s academic future with confidence.