A quality undergraduate engineering degree that costs ₹8 lakh today will cost roughly ₹22 lakh in 15 years at 7% education inflation. Waiting until your child reaches Class 10 to start saving is too late. Here's how to plan it right, starting with as little as ₹500 per month.
Step 1: Set a Realistic Target
Pick the likely course: engineering, medicine, MBA, or overseas. Look up today's total cost, then apply 6-8% annual education inflation for the number of years until enrolment. This gives your target corpus.
Step 2: Calculate the Monthly Savings Needed
Use our RD calculator or SIP calculator. Example: to reach ₹20 lakh in 15 years at 7.5% p.a., you need to save about ₹6,200 per month.
Step 3: Choose the Right Product Mix
- YoursPay Children Savings Scheme — safe, predictable RD structure
- Sukanya Samriddhi Yojana (girl child) — high government-backed interest
- PPF — 15-year tax-free compounding
- Equity mutual fund SIP — for goals more than 10 years away
Step 4: Automate and Increase Yearly
Set auto-debit from your salary account. Every year on your child's birthday, bump the amount by 10% — matches your salary growth and beats education inflation.
Step 5: Review Every 3 Years
Check corpus vs target. If your investments are ahead of plan, you can reduce risk closer to the goal date. If behind, top up with annual bonuses.
Common Mistakes to Avoid
- Buying an insurance-cum-investment policy — poor returns hidden in complex charges
- Waiting for a lump sum before starting — the earliest ₹500/month beats a late ₹5,000/month
- Ignoring inflation — ₹10 lakh today ≠ ₹10 lakh in 15 years
Frequently Asked Questions
Should I open the account in my child's name?
For accounts like Sukanya Samriddhi, yes (girl child). For most bank RD/FD schemes, the account is opened in the parent's name with the child as nominee — this keeps operations flexible.
Are child savings scheme returns taxable?
Interest from most RD/FD child schemes is taxable in the parent's hands. PPF and SSY interest is tax-free under current rules. Verify on the Income Tax India portal.
Can I withdraw early for an emergency?
Most child schemes allow partial withdrawal after the lock-in. Try to avoid dipping in — it derails the compounding curve.
Talk to a YoursPay advisor — visit our Hasthampatti head office in Salem or call +91 98945 76238. First consultation is always free.