Until pre-school, that is in the first year after a child is born, the average cost of child care is around Rs. 1 lakh. That includes expenditure on medicines, vaccinations and baby-care products as most of these facilities are quite expensive, especially in urban and semi-urban locations.
After completing two years of age, the bigger expenses come into the scene, such as schooling in the form of playgroups. The outflow for that can be Rs.50000 to Rs.1 lakh and varies depending on the facilities provided to the child. It also depends on the kind of playschool chosen.
Not to forget the extra expenses on continuous new toys and clothes for a child in the early years as they continue to outgrow the old ones.
The major chunk of expenses involved in the cost of raising a child is on education. According to data, most parents spend at least half of their yearly income on their child’s education and extra co-curricular activities. It is natural for you to want the best education for your child and to meet the fees of good schools, a lot of money gets required.
A decent school charges an annual fee of Rs.50000 to Rs.2 lakh. That means, 12 years of school education can lead to an outflow of around Rs.11 lakh to Rs.43 lakh assuming 10% annual education inflation. Moreover, this cost excludes the expenses incurred for tuition fees, co-curricular activities etc.
The largest monetary outflow that parents experience is at this stage. So what is the average cost of popular career options like engineering, medical etc.? If you want your child to pursue engineering, you may have to pay Rs.10 lakh today, and the same can cost you about Rs.40 lakh to Rs.50 lakh in the next 15 years. Similarly, for an MBBS degree, the costs can be around Rs.25 lakh today to above Rs. 1 crore in 15 years.
However, one way around this is to opt for education loans
to fund higher studies. That can ensure your child gets the desired career with a significantly less financial burden on you. But it is also necessary to opt for loans with reasonable interest rates to cut down your expenses.
Entertainment costs have also risen significantly of late, especially in urban areas. If you are raising a child, you obviously cannot only focus on the bare minimums or necessities. For an all-round mental, emotional, social and physical development, spending money on sports, entertainment, cultural events, hobbies etc. is also necessary. The amount that you may have to spend on these discretionary expenses can vary from child to child.