Here's how young parents can save for their child's education

Every parent wants bright future for their child and for that, they are ready to spend on their education. But, what is that price? 

How can you save for your child's education? We tell you how. 

Adhil Shetty, CEO & Co-founder Bankbazaars said, "Like every other expense, education fees will also increase over time. So the sooner you start, the easier would it be for you to save up enough to fund your child’s education."

While the actual amount you need to save every month would vary depending on the corpus you intend to build, there is no doubt that you need to invest early and regularly to build up a sizable corpus.

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The best way to save regularly and at the same time maintaining discipline while saving is starting Systematic Investment Plan (SIP).

The most important thing that young parents can do for their child's education is plan early.

Speaking with Zeebiz, Archit Gupta, Founder and CEO Cleartax.com, said, "College education is going to be expensive and the best way to prepare for it is by starting an SIP in an equity fund as soon as one can."

If parents can start this SIP when the child is 3-5 years old, they will have a good 10-15 years to build the corpus. This will not burden them at the time when the child goes to college and would have also allowed them to benefit from the power of compounding interest, Gupta said. 

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Second most important rule parents should follow is while making your plans, sit down with your partner and sketch a rough layout of your child’s future and all the expenses involved. 

Parents are not going to need the same amount of money each year. For instance, graduation years, be it form the Montessori or class 12, may entail a higher expenses. School fees may be lower than college or professional course fees. There may be capitation fees. So factor in the milestones and make your plans accordingly.

Moreover, parents should also make sure they avail tax-saving benefits on the tuition fees they pay. 

Up to Rs 1.5 lakh paid as school or college tuition fee can be claimed by either parent for up to two children. This is an important tax-saving deduction that parents shouldn't miss out on.

If you have a daughter, the scheme that you should consider is Sukanya Samriddhi Yojana. This is a small investment scheme exclusively for the girl child. It is backed by the government and offers capital protection, fixed returns and tax saving, as pointed by Gupta. 

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Further, to tackle the burden teach your children the value of money, the need for planning expenses, and the importance of saving. This will make them look at financial independence from a different perspective, and enable them to find ways to fund their higher education without putting too much load on parents. 

Amid all the education planning, parents must not forget that they are getting old too and the age of retirement is getting near with each passing year. 

"Do not compromise on your own retirement planning because you were too busy saving for your children’s education. Today, a number of education loans are available to fund higher education. You do not have to do everything yourself," Shetty added.