SIPs for your child’s education: How to start, structure and stay on track

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Planning for a child’s education has become a long-term financial task. Fees for engineering, medicine, design and overseas courses have climbed sharply in the last decade, and the gap between what parents expect and what they eventually need is often wide. Starting SIPs early — even with modest amounts — brings structure to this goal and reduces the pressure that usually builds up in the final years before college.

Begin with the kind of education you want to plan for: India or abroad, private or government, and the course your child is likely to choose. Most parents underestimate inflation in education, which often runs higher than regular inflation. A course that costs ₹15 lakh today can easily cross ₹25–30 lakh in a decade. Once you have a broad number, divide it into a monthly SIP amount that fits your budget.

If your child is younger than 10, equity funds make sense because they can handle market swings over long periods. A mix of large-cap and flexi-cap funds keeps things stable while still giving growth. As the goal comes closer — say five years away — gradually shift some money to short-term debt funds or a conservative hybrid fund so that a sudden market dip doesn’t derail the plan. The transition should be slow, not a last-minute move.

Most parents like SIPs because they automate the saving habit. Once the amount leaves your account every month, the rest of your finances fall in place more easily. It also keeps you invested during both good and bad market cycles, which helps you accumulate more units when prices are low.

Your child’s plans may change, and so may your income. A yearly check allows you to top up the SIP amount if needed, or change the fund mix as you get closer to the goal. Small increases — even Rs 1,000-2,000 a month — can make a noticeable difference over long periods. Avoid switching funds too often; consistency matters more than chasing the newest high performer.

Equity funds do not offer upfront tax deductions, but ELSS (equity-linked savings schemes) can help if you are claiming deductions under Section 80C. Not every parent wants the three-year lock-in, yet for those who are comfortable with it, ELSS funds can be a part of the overall SIP plan. For debt funds used near the end of the goal, remember that capital gains are taxed based on your slab, so timing withdrawals matters.

Parents sometimes break their education fund for emergencies or short-term expenses. Keeping these SIPs in a separate folio or account helps avoid mixing them with general savings. A dedicated portfolio — even a simple spreadsheet — ensures clarity about how much you’ve built and how much more you need.

No one can predict what your child will finally choose to study, but having a well-funded corpus gives them options. If the final cost turns out lower than expected, the surplus becomes part of your retirement fund. If costs rise higher, the early discipline cushions the gap.