Expenditure on kids!
Many young couples I know shudder to think of having a kid. One of the guys told me ‘I am still a kid…how can I have a kid‘. And he is 29 and so is his wife.
This is not a class on whether to have a kid, but for those who have a kid! Have you wondered how much does a kid cost you?
Does the cost increase (per month) as the kid’s age increases?
Well have you at least tried enumerating them? School fees, clothes, the doc, the dentist, vitamins, antibiotics, dresses and accessories – the tennis shoes, the swimming class and the badminton racquet, the list just goes on.
Of course I am not talking food, rent, etc. which go to the common pool – and then get divided by say 3 or 4 depending upon how many people are there in the house.
Then there could be coaching class fees, parties, gifts, entertainment, gadgets,….
Sadly there is very little research in India about such things, and one has to just make estimates. Estimates can obviously go wrong by a mile…and we would not even know about it.
The costs of a kid – right from delivery to their wedding can be a stunning Rs. 1 crore – for a kid born in say 2000. Safely add 8% inflation for every year after that. So in case you have decided to have a kid in the year 2013 or 2014, you should estimate a requirement of about Rs. 2 crores. This is of course assuming a normal kid, normal delivery, ordinary school, ordinary education. If you throw in an International school – that itself will jack up prices by about Rs. 50 lakhs.
Happily most of this money will be needed back ended, so you do have time to earn it! However if you think your son needs a brother or a sister…well add another Rs. 4 crores to the budget 🙂
arjun
It’s like your own personal ULIP!
wealthucreate
Not an Iota of doubt on your numbers. when i compare myself… 10 years back when i did my engineering, the money is spent complete my entire engineering could be 50 k.
Today i am looking for pre-school for my kid. for pre school it is 50k. I am still looking for options that would fit my budget.
expense are bound to increase
Vidya
You can see why nuclear families with single children are becoming more of a norm these days. One cannot afford another kid .. !!!! 🙂
But seriously … ! It is expensive .. added to which we should not only plan to equip the child to stand on his/her own feet .. we have to look out for our own retirement since we do not want to burden our children with that .. ! Add medical costs to the retirement .. 🙂
And imagine a scenario like it happened in US … some kids moved back home due to the job scenario and downturn … lol … we have to plan for them … even after they are working too !! 🙂
Jitu
Dear Subra,
Why don’t you put up this post with ‘Population Control Agency’ they might love this and put it in TV 🙂
You’re really scaring people off Subra…even those who are not yet married (like me) 😛
Good one, as usual…
Pandu | Online Marketing | Diametric
Subra, very true. Costs are spiralling because every parent wants ‘the best’ for their kid. Remember, low cost options are available — just that not many parents (me included) want it.
To corroborate the above point, in a developed country like Japan, most couples have only one kid – because of the expenses involved. Japan’s population is decreasing, so much so, they may not have enough people to man their factories by 2020. Current Govt is giving financial incentives for having more kids.
Have a differing viewpoint. Remember, Nehru said Children are the future of the Nation. If you are confident about bringing up right minded, social conscious children – go for the extra child OR adopt one. Consider your children as your #1 Wealth (not equity :), to Subra’s chagrin!). Of course, as many said here, cover your retirement also.
Our parents NEVER thought about financial aspects when they had us (usually more than one). And we turned out pretty ok! There are some things in life, where one can’t look at only financial aspects & decide! You need to be optimistic, go beyond logical reasoning & financial aspects & decide.
Having Children is probably one!
Althought, don’t over it.
Yes, I agree, it is a subjective decision.
Bala
Put the kid in some Govt school – Dr Abdul Kalam was a product of sunch institution only.. If your kid has the capacity to learn, he can learn anywhere. If your kid is no good, you are not wasting high tution fees on him.
Dont waste your time with arranged marriages for kids – they are more expensive, let him/her have love marriage instead – so you can keep ur costs low.. Save a lot of money and effort.
Last but not least – kick that ego – “I want the best of the best for the kid”. Be practical. Sit back & relax – if you are struggling to make ends meet due to high costs, so are millions of others.
pravin
well,only relatively recently have parents started assuming all sorts of responsibilities for their children.children now come in the liability column (someone to be take care of for a long while) instead of the assets column (someone who can contribute to family income).while this reflects changing attitudes,it is a disaster.many countries are already in negative fertility territory.so far india is not,but social and political attitudes towards population is distressing.more human beings are seen as a burden.this naive thinking is an upshot of the idea that all human beings either need nurturing from a)the welfare state or b)helicopter parents.
parents need to relax.their children will do just fine even if they dont get the international school experience.btw,the internet schools like khanacademy.org will probably change the schooling model in the future.education will definitely be cheaper.
so,have more children.3 is the best.one for mamma,one for papa and one for all of us.
Siva
Dear Subra,
As for as I know couple spend on their kids as much as they can, not as much as they should. A salaried person of Rs. 4 lac can not spend much on their kids. He can expect his kid or kids study well and get a good degree(by loan) and lead his own life. Any couple can do this.
You can not push your dreams on your child as you state this in your blog posts(if it is on finance it should be on everything).
This post is a scary one for sure!
suresh
I agree with Pravin. Also the higher cost of raising children means it makes sense to have a joint family, if only for purely economic reasons. Of course grandparents invariably tend to be the best teachers for grandchildren. All for keeping the Joint Family.
Vaibhav
Well I’m not married yet,so this is just speculation, but I think in earlier times it used to work as a pension plan for old age, when your kids take care of you in your twilight years.
These days however, I suggest after 12th standard cut them loose and make the kids financially independent and let them finance their own higher education. Also, make sure you have a sizeable retirement nest-egg. What goes around… 😉
V
Subra, you have rightly pointed out the importance of “family-planning” in a different sense.
I’m an unmarried male in his mid-twenties, earning a decent salary, yet the costs involved in getting married and having kids, is scary.
This may be a financial-related blog, but one also has to look into the emotional aspect of things. You will want your kid to have a better standard of life than you had, hence you’ll (i assume) aim at better positions and pay packages, not for career’s sake, but for your offspring’s sake.
But then comes another scary thought. I grew up in a home where everything that was needed was present, yet I understood the value of money. But if I were to grow rich, I would almost inevitably end up making my kid a brat, OR one with no sense of financial planning. (Future son, if you are reading this from Google’s cache, I’m sorry for being so cynical! 🙂 )
(Now, don’t consider me sexist that I haven’t mentioned “daughter”, its just that I’m yet to find a girl who reads finance blogs!)
Vaibhav’s post contains the best option IMO. (and am glad he mentioned “what goes around, comes around”!)
Ppd
I find this post is materialistic one and scary too….
Kids are not a liability ….. one should consider them as god given gift (only those people will understand it better…. who could not have one for whatever sad reasons).
if we follow this relation between finance and kids…. it is not too far to forget the meaning of a brother/ sister.
For that matter, getting married is also an expense
(which can be very well avoided) plan f a flat, furnish it etc….. then would you say that… stay as a Paying Guest and plan for a early retirement?
Praveen
How many of the ppl who advise to let their children take edu loan to complete their professional education had themselves done that., i.e completed their professional degree without spending parents money???
bemoneyaware
How much does a school education for a child costs in 2011? Rs. 94,000/- annually for single child on school education. This includes fees, books,transport, stationery, uniform, educational trips,building fund, extra tuition and extracurricular activities.
bemoneyaware
You are right in pointing that cost of education is rising. And yes people are postponing getting married(even girls) and kids. Having a kid is a BIG responsibility 24 X 7 job and finance is just a small part of it. If one delay having kids late then the entire process gets shifted. Delay having kids and complications might be there in pregnancy, parents of kids friends would be of different age group, one might be not physically active to play with kids, kids might still be studying when one retires…the list is endless.
There is a time and place for everything including kids!And there is never a right time!
param
part of this is also because as parents who earn well, we want to have ‘the best’ of everything for our kids. our parents gave us ‘good enough’ and we did well, so why should we act differently???
subra
what are u saying param? elucidate?
param
subra, sorry for not being clear enough…
what i mean is that today even middle class families want to put their kids in intl schools at unaffordable fees in the range of 50K-100K per annum. we studied in KVs at fees of around 15-45 rs per month, and even today KVs have fees in the range of 100-500 rs per month. but we simply are shy of putting our kids in these schools due to ‘keeping up with the joneses (or sharmas) syndrome.
we celebrate our kids birthdays in fancy banquet halls, while we had our own birthdays celebrated at home & it was much more fun.
we want to buy the costliest clothes, fanciest toys & gadgets, while we were much contended with much less that our parents bought for us. i feel people just lose sight of the macro picture when spending for kids at the micro level…
bemoneyaware
My two cents:
Parents always want the best for their children -irrespective of the times.
Child did not ask parent to put in a school with fee of 50k-100k per annum. The parent decided! Why blame the kid if he comes and asks for the same book/toy/game/holiday as his classmates.
And we need to realize that there is no limit to wishes, the concept of needs and wants needs to be understood by the parents as well as passed on the children.