19/09/2022
Good article on Saturdays topic in Economic Times
Having a child? According to rough estimates it costs anywhere between ₹1.5 crore to ₹2 crore to raise a child in India. What can you do to plan better 👇
There are many costs that one incurs while raising a child. These include education, healthcare, food, clothing, entertainment, transportation, housing and others.
But all of these don’t occur at once. According to this research it costs about Rs 1.3 crore to raise a child over a 21 year period. Money required at various stages is -
- Rs 20.1 lacs or 16% in the first 5 years
- Rs 32.6 lacs or 25% in the next 7-8 years
- Rs 76.5 lacs or 59% in the next 7-8 years
This is how you could plan 👇
✅First have an emergency fund of 9-12 months expenses and keep it in liquid instruments.
✅Next, add your child to a family floater health insurance policy and have a minimum cover of Rs 10 lakhs. You will spend a lot of money on healthcare in the initial years.
✅Break down the money needed into short term and long term requirements.
✅For funds required in the short term i.e. 1-3 year periods, have a higher allocation to debt instruments. Don't let market volatility impact your corpus. Consider liquid funds, debt mutual funds, FDs etc.
✅For funds required in the long term i.e. 7-10 yrs, have a higher allocation to equity instruments to help build your corpus. Consider equity mutual funds, blue chip stocks, corporate bonds and PPF etc.
These numbers can increase or decrease based on inflation. So it is important to allocate your money efficiently. Mistakes to avoid 👇
▶️Don’t keep excess money in savings account except emergency fund
▶️Make wise spending choices so as to increase your savings rate
▶️Don’t only save but invest the money to build a corpus
▶️Review your portfolio each year and rebalance
With education costs increasing rapidly and inflation going up, it is critical to plan and invest early to maximize compounding benefits.
What else would you add?
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Pic source - ET
