Children Education Cost in Parenting Cycle!

For all parents, the greatest rejoice is the birth of first child. And, yet the chain of expenses associated with bringing up starts with the joy of a new baby on the way. In fact, starting with maternity, food, clothing, education, hobbies and healthcares to entertainment and caretaker costs, having a child costs you a lot more than love and emotional energy.  The purpose of this article, we will stick to an average middle – to upper-class parent towards expenses to be incurred for emotional or social reasons. Some expenses have to be tailored to your wallet.  For working parents, childcare expenses are now an important part of household budget whether or not they live in joint family. Since, grandparents are big source of strength and support to supervise childcare helpers, the cost of domestic help or crèche remains high until children go to school.

 

The Initial Cost of Baby

 

The baby cycle begins with maternity cost, is often underestimated by the most of parents. The cost of all the tests and medical-checkups associated with childbirth add up to anywhere between Rs50,000 and Rs1 lakh, depending on whether it is a normal birth or a caesarean. And this does not include the extra bucks you may want to shell out to test for down’s syndrome or if you want to bank the core blood for your child’s future health. It can set you back by Rs1 lakh.  In these years, there is never a less expensive phase in a child’s life; it is the cost of immunization, minor illness and for middle-class parents, things like diapers, baby food, toys, and childcare and birthday celebrations.

 

The Pre-School Costs

 

The education cycle begins with pre-school which is almost between 16 to 18 months after birth, can cost anywhere Rs10,000 and Rs1 lakh per year. For urban parents, securing admission for their child to a ‘good’ school, often involves shelling out some kind of donation or capitation fee. Estimates of the cost of raising one child to the age of four years may vary from 10% of monthly family salary which goes to monthly caretaker/crèche expenses to as high 25%.

 

The School Costs

 

As the children grow up, children’s education and their hobbies are the biggest concern for the most of parents. Clothes, entertainment, vacations, gizmos, pocket money, food, healthcare and housing followed in that order. The average fees of private schools are Rs60,000 to Rs3 lakh per annum, transport costs an average of Rs12,000 to Rs25,000 child per year, uniforms, text books, stationery, shoes, school bags etc. parents have to nearly spend Rs6,000 to R10,000 per child depending upon the school. Extra coaching and extracurricular activities, placing a significant burden on their family budget.

 

These worries about the high cost of education makes gullible parents in this group get easy traps for mis-selling child insurance plans. Almost all the parents have had child insurance plans and have been paying hefty premium every year which eats away good part of their saving as expenses.

 

The Higher Education Costs

 

This is the age when costs of raising a child really spiral, on all fronts. Costs of private coaching, hobbies, mobiles, gadgets, holidays with friends, eating out, movies etc. rise rapidly and it is an alarming time, when poor financial planning of earlier years begins to be felt. In these times, Indian parents being willing to sacrifice almost everything for their children. They are ready to take an education loan to pay for high professional course. Raising a child till the age of 21 could cost you between Rs50lakh to Rs60 lakh, if we consider costs as of today. And costs may further rise in double-digits.

 

Trigger for Financial Planning

 

The avalanche of education costs to children is definitely got trigger for financial planning and savings happens with the birth of the first child. While planning the cost, you should not get carried away by the emotion that your child must get the best of everything. Think rationally, do not follow the herd and listen to your heart and use your brains. Though the education is the biggest expense, you should plan well all judicious expenses and invest in equity at an early age for long term. You should start teaching children financial discipline at an early age. Get them to buy household groceries and items from the neighborhood stores to know the expenses and ask them to manage expenses. Barring children insurance plans, you must opt other financial products as you will need adequate term life insurance and health insurance for family so that your child’s education expenses are not disrupted. Save regularly each month in equity diversified fund and PPF for at least 20 years for the benefit of your child.