Children’s Day Special: The Price of Parenting

Children’s Day is a time to celebrate the joy of raising children and also a moment to reflect on the financial responsibility that comes with it. From rising school fees to college costs that rival global standards, parenting today requires as much planning as affection. The reality is that the price of parenting is increasing faster than most families can anticipate.

Here’s what’s driving the change and how you can prepare financially.

The Soaring Cost of Raising Children

Recent estimates suggest that raising one child in an urban Indian household can cost around ₹45–50 lakh by the time they complete their education. Education alone can consume 40–50% of this amount , with school fees, coaching classes, and extracurricular activities adding up quickly.

For instance, private school fees in metros can touch ₹8–12 lakh a year for higher classes, and professional college tuition (engineering, medicine, management) can easily cross ₹20–25 lakh. Add in lifestyle, healthcare, and digital learning costs, and the numbers become overwhelming for most middle-income families.

This rising financial pressure is also influencing social choices — with more couples delaying parenthood or opting for a DINK (Dual Income, No Kids) lifestyle to maintain financial freedom. But for those who do plan to raise children, early planning is key.

What Parents Can Do: Smart Steps for a Secure Future

1. Start Early

The earlier you start saving, the less you’ll feel the pinch later. Begin investing as soon as your child is born (or even earlier). A Systematic Investment Plan (SIP) in an equity or hybrid fund can help you accumulate wealth over 15–18 years.

For example, investing ₹5,000 per month for 18 years at an assumed 10% annual return can grow to about ₹28 lakh which could be enough to cover a major portion of higher education costs.

2. Align Investments with Education Milestones

Break your child’s financial needs into milestones like school, college, post-graduation. Use a mix of funds:

• Equity Funds:

for long-term goals (10+ years)

• Hybrid or Balanced Funds:

for mid-term goals (5–10 years)

• Debt or Short-Duration Funds:

for near-term needs (under 5 years)

This approach balances growth and stability across different time horizons.

3. Beat Inflation with Growth-Oriented Investing

Education costs typically rise at 8–10% annually, far higher than general inflation. That means traditional savings or fixed deposits may not be enough.

Equity Funds, though market-linked, can help your corpus grow faster over time and counter the impact of rising costs.

4. Automate and Stay Disciplined

Automating your SIP ensures consistency. Even if markets fluctuate, staying invested helps benefit from rupee cost averaging and compounding. Avoid pausing SIPs unless absolutely necessary. Consistency matters more than timing.

5. Protect and Review

Both life and health coverage are critical in safeguarding your child's future, regardless of the circumstances. Insurance ensures your child’s financial requirements are met in case something untowardly happens to you.

Also, review your investments every year to adjust for income changes, inflation, or shifting education targets.

The Bigger Picture: Balancing Dreams and Goals

Raising a child is deeply rewarding both emotionally and financially. But managing the rising “price of parenting” means making conscious financial choices today. Early planning through mutual funds can turn large future expenses into achievable milestones.

This Children’s Day, take the first step toward securing your child’s dreams; not just with love, but with a plan.

Disclaimers:

Past performance may or may not be sustained in the future. The calculations provided above are based on assumed rate of returns and it are meant for illustration purposes only.

SIP does not assure a profit or guarantee protection against loss in a declining market.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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