Diapers, doctors, schooling: know the costs of raising a child in India

The cost of education in India is absurdly high, particularly if one opts for private schools. Typically, parents spend ₹25 -50 lakh, depending on the type of school and the course offered. be it state, central or international boards. Higher education, though, depends on the stream that children decide to pursue after school: engineering, medicine, law, or accountancy. The fees for this could range from ₹15 lakh to as much as ₹50 lakh. And then there are specialization courses, including postgraduation. That means more fees!

If inflation is factored in, the costs will soar. For example, a five-and-a-half-year MBBS (Bachelor of Medicine and Surgery) course could today easily cost around ₹50 lakh. By 2030, it could touch ₹80 lakh. Similarly, a four-year engineering degree which costs around ₹15 lakh today can go up to ₹37 lakh by 2030. If international education comes into the equation, the cost could rise significantly.

Some people start investing for their child’s higher studies soon after they become parents. Mint caught up with a few of them to find out how they are managing their children’s education, both present and future studies.

Raising a single child

Delhi-based Vaibhav Aggarwal, 38, and his wife Neha spend ₹1.56 lakh annually on school fees for their six-year-old son who is in class II. This includes tuition and school bus fees, besides the costs on uniforms and books. Aggarwal, assistant professor (accounting and finance) at Jindal Global Business School, says the fee is less compared to other schools in Delhi. Neha is an assistant professor (engineering department) at a college in Delhi.

The couple have also enrolled their son in dance (fees of ₹26,400 annually) and swimming classes ( ₹12,000 annually). They also send him to summer camps during the school vacation every year. That costs them another ₹5,000-6,000.

Aggarwal says he spends around ₹24,000 yearly for his child’s medication, including vaccinations. The costs are also higher because doctors in Delhi charge hefty consultation fees. The couple also spend ₹40,000 on their child’s birthday celebrations. That doesn’t include the ₹1,600 spent every month on gifts and partywear for birthday celebrations of their son’s friends. They also have a budget of ₹36,000 annually for buying new clothes for their son.

The couple have not earmarked any specific investment for their child’s higher studies, but Aggarwal says it is part of their overall financial plan.

Mumbai-based Pawan Valecha and his wife Kiran, a homemaker, visit their hometown in Rajasthan every year with their eight-year-old son. “We also like to travel to other parts in the country. It costs us around ₹25,000 per trip," Valecha says.

Valecha, a chartered accountant, spends ₹1.72 lakh annually on his son’s schooling. This includes everything from tuition fees, transportation, uniform and books. His son has also enrolled for abacus classes (fees of ₹11,000 annually) and dance classes ( ₹12,000 annually) as part of his extra-curricular activities. During summer vacations, he goes for cricket and drawing classes. And that costs Valecha ₹4,000.

Birthday celebrations are a costly affair for the Valechas. And it depends on whether they are celebrating their son’s birthday at home or outside. Valecha says it costs around ₹25,000 to host a birthday party at home and around ₹50,000 if it is at a venue outside. Valecha also spends ₹1,000 almost every month on gifts for his son’s friends on their birthdays. As for his son’s higher studies, Valecha is planning to soon start a systematic investment plan (SIP) via mutual funds.

Raising siblings

Bengaluru-based Lekha Tejas, 35, and her husband Tejas SR, a lawyer, have a five-and-a-half-year-old son. Lekha gave birth to her second child eight months ago.

Lekha, a homemaker, has enrolled her older child in a Montessori school that charges annual fees of ₹80,000 (including ₹5,000 for books). That, though, is cheap compared to transportation costs. The school is located far from their house. So, the couple shell out ₹1.8 lakh per annum on fuel and driver costs.

They spend ₹25,000 annually on clothes for their son. As for the younger child, there are hand-me-downs that includes toys.

Expenses for the newborn include ₹16,000 spent on diapers so far. Lekha says she uses disposable diapers only at night and high-quality reusable cloth diapers during the day. They have also hired a nanny for ₹15,000 per month.

“The cost of regular check-ups, medicines and vaccinations work out to around ₹50,000-55,000 per year for the newborn. As for the older one, it is now around ₹18,000," Lekha says. Every year, she spends ₹25,000-30,000 on toys for her son. “I also buy story books for my son; he loves it and wants us to read them out to him. These books cost us ₹5,000-6,000 annually," she says.

As for her son’s higher studies, Lekha says they have already started making separate investments. They are investing ₹13,000 in a mutual fund SIP. Lekha says they haven’t yet worked out a plan for their second child.

Indore-based Kapil Jain, 40, and his wife Neha, a homemaker, spend a total of ₹3 lakh annually on school fees for their children—a 13-year-old daughter and a five-year-old son.

For extra-curricular activities, Jain, a chartered accountant, pays around ₹2,500 per month for his son’s karate classes and ₹6,000 for his daughter’s swimming classes. He has also enrolled her in dancing classes for ₹1,500 per month. During summer vacations , his son attends summer camps at a cost of ₹5,000-6,000. The Jains spend ₹2,500-3,000 per month on clothes for each of their children.

Almost every month, the couple buys gifts worth ₹1,000-1,200 for the children to spend on birthdays of their friends. Jain says he spends around ₹25,000 on his son’s birthday bash, organized at some outside venue, every year. His daughter, though, prefers to visit a restaurant with her close friends and the celebrations usually cost ₹7,000-10,000.

Jain says that the healthcare expenses for each child comes to around ₹15,000-20,000 annually. The Jains also plan at least one outstation trip every year. The family vacation costs around ₹1.25-1.5 lakh.

For his children’s higher studies, Jain has started an SIP in mutual funds of ₹20,000. He plans to double this and is targeting a corpus of ₹1-1.5 crore.

Managing education costs

According to financial advisors, parents need to find a balance between the education that they want to provide their children and what they can afford. “While their cash flows might allow them to ensure high-quality education, it should not be at the cost of their other major goals such as retirement. These decisions need to be taken carefully as it may not be easy to reverse them once the child is admitted to a particular school or course. Parents should also start planning for their child’s higher education as soon as possible and it is advisable to plan for a higher corpus," says Vishal Dhawan, founder of Plan Ahead Wealth Advisors.

Dhawan says that parents will not know what their child wishes to pursue right till their adulthood. “So, it is better to invest towards a larger education corpus, factoring in a higher inflation rate for education," he adds.

To deal with the unpredictability of costs when it comes to raising a child, Dhawan says building an expenses tracker on a monthly basis can help. “If there are months when expenses tend to be on the higher side due to school semester fees or other costs, the parents can be better prepared," he points out.