Figuring out that it's going to cost $200,000 to educate a child is by far the easiest part of any parent's educational financial planning strategy. The second, and much more difficult part is actually coming up with the money.

The good news is there are a range of products and strategies aimed at easing the burden. But the real key to funding your child's private school education is to start early.

Chairman of Financial Security Personal Investment Group Paul Chiplin tells his clients, who are daunted by the potential burden of educating their kids, that the later they leave it, the greater the contributions will have to be.

"Assuming an [annual return] of 7 per cent, if you were to start with savings of $1,000 when your child was one year old, you would need to put away $518 a month to accumulate enough to pay $9,000 at the beginning of the year for six years," Chiplin says.

"But if you were to leave it until the same child was seven, you would need to save $903 per month to be left with the same amount."

Two main saving options exist. The first is to use a special-purpose financial product, like that offered by The Australian Scholarships Group, a friendly society which was formed to provide education allowances.

Its Secondary Schooling Benefits Scheme requires you to start an account before your child turns seven, after which weekly or monthly contributions of as little as $10 may be made. Contributions and tax-exempt investment earnings are passed on to the parents during secondary school years.

An alternative strategy for some parents may be to adopt a do-it-yourself approach.

The first point of call for Chiplin is to use a growth investment, through a diversified unit trust which invests across a range of different asset classes, including the so-called "growth" asset classes of property and shares.

"You can allow yourself a higher exposure to shares because of the time frame that starting early allows you," Chiplin says.

If you do not have the luxury of a lot of time, your approach may have to be more cautious.

Head of research at Bridges Financial Services, Dominic McCormick, warns his clients that over three to five years shares may not outperform the market.

McCormick says listed investment companies may be a good option, particularly at the moment, as their share prices are generally trading at a discount to net asset backing. Diversification is a key element in any strategy.

"Even if your share funds do well, the risk of outperforming an underperforming market and ending up with less than you need may not be one you are willing to take," McCormick says.

An alternative espoused by Robert Keavney, managing director of Investor Security Group, is based on the family's home mortgage.

Keavney advises establishing a savings plan through a flexible mortgage. Parents can then pay the home loan off as rapidly as possible and re-borrow funds at the beginning of each school year.

"In after-tax dollars, if you were to establish a flexible mortgage that allows you to pay up, draw down and then accelerate the payments when you need to, you are guaranteed to make back the interest rate," Keavney says. "The advantage is if you were to utilise other investments to get a return in after-tax dollars, you would need to invest much more."

A variation on using borrowed funds to pay for education may involve a gearing plan in order to leverage either an investment fund or a share portfolio.

Advisers recommend that, due to the additional potential risk involved in gearing, it best suits investors with a relatively long time frame. Some parents may be attracted to the approach because the potential returns on offer are quite large, particularly if they started saving late.

Chiplin suggests using an instalment gearing plan which allows relatively small regular contributions to be made and geared.

"Parents can initially invest as little as $1,000, then follow it up with contributions of $250 per month. They can then draw down on the loan when required," Chiplin says.

Bridge's McCormick retains a more conservative approach, arguing the interest on any loan used to fund education will not be tax deductible.

"Ideally, if you are forced to borrow to fund your child's education, use accumulated assets that you have built up," he says.

An essential consideration that all financial planners agree on is to bear in mind the appropriate tax structure to use.

"There often tends to be an emotional view with some parents to keep the money in the child's name, mainly to discourage them from using the funds for other things," McCormick says.

While this strategy is fine, parents run the risk of having their savings taxed at penalty rates of up to 66 per cent because minors are taxed on their "unearned income".

A far better strategy, according to ISG's Keavney, is to place the funds into the name of the lowest income parent. This will minimise the tax paid at that parent's personal tax rate.

"It will be even better if that parent is not working," he says.

"By not having to give back up to 48 per cent of your accumulated funds, you will retain more as a lump sum, which will then compound far more rapidly."

Retired grandparents, eager to help with the costs of education, could also assist by placing the funds in their own name, thereby eliminating the need for a tax-paying parent to do so.

In terms of an overall strategy, Bridge's McCormick advises that parents view the issue of funding education as part of their overall financial plan, rather than keeping it separate from everything else.

"At the end of the day it's all about having enough money to pay for the school fees at the time you need it, not so much the strategy that you used to get there," he says.

Chiplin agrees. "Despite the onerous targets, if you adopt a sensible approach, diversify your portfolio and give yourself time, saving enough money for the duration of your child's education is within everyone's reach."