How to save for your children’s education: A guide for parents

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Saving for your children’s education and future doesn’t have to be burdensome.  Planning early ensures you provide the best opportunities without financial stress. There are options that offer tax benefits, have low entry amounts, and are safe and backed by the government.

Here’s a guide to effective strategies for saving:

1. Start Early and Plan Ahead

Begin saving as soon as possible to benefit from compounding. Estimate future education costs and create a dedicated savings account.

Tip: Use online calculators to estimate how much you need to save monthly based on your goals.

2. Invest in Systematic Investment Plans (SIPs)

SIPs in mutual funds allow you to invest small amounts regularly, benefiting from rupee cost averaging. Equity mutual funds, in particular, are ideal for long-term growth.

Why SIPs: Low entry amounts (₹500) and potential for higher returns over time.

3. Sukanya Samriddhi Yojana (SSY) for Daughters

This government-backed scheme for girl children offers high, tax-free returns with a lock-in period until your daughter turns 21.

Benefits: Safe, long-term savings with tax deductions under 80C.

4. Public Provident Fund (PPF)

PPF offers guaranteed, tax-free returns over a 15-year lock-in period, making it a safe option for risk-averse investors.

Why PPF: Reliable returns with tax benefits, suitable for long-term savings.

5. Children’s Education Plans

Insurance companies offer education-specific plans that combine life insurance and savings, providing a lump sum at key milestones.

Key Benefit: Financial security in case of a parent’s death, with payouts timed for education needs.

6. National Savings Certificates (NSC)

NSC provides fixed returns with a five-year lock-in, making it a safe investment for risk-averse parents.

Benefits: Safe and backed by the government, with tax deductions under 80C.

7. Child-Focused Mutual Funds

These funds balance equity and debt investments, designed specifically for child education savings.

Why Choose: Balanced risk and flexible investment horizons, ideal for long-term education goals.

8. Leverage Education Loans

For higher studies, consider education loans, especially for expensive courses abroad. Loans also offer tax benefits under Section 80E.

Why Consider: Spreads out education costs and offers tax relief on interest payments.

9. Utilize Tax Benefits

Many investment options, like PPF, SSY, and education plans, offer tax deductions under Section 80C, helping reduce your taxable income while saving for education.

Investing in your child’s future doesn’t have to be a burden if you plan strategically. If you start early, plan carefully, and use the right investment avenues, you can ensure your child’s education is well-funded, securing their future while protecting your financial health.