Raising children incurs significant expenses. The expenses are not just education or career building, but bringing up a child in modern times needs careful planning much before the child is born.
In a fireside chat with actor R Madhavan, Edelweiss Mutal Fund MD & CEO Radhika Gupta talked about various instances of modern-day parenting that can burden a couple and set higher, unnecessary goals for the kid.
Sharing her views on expensive clothes, gifts and shoes, Gupta said she never opted for branded shoes for her child when he was young. “It may make me sound cheap, but certain shows kids come for Rs 2,000 to 3,000. I refused to buy them for my kid as they could be redundant in 2-3 months. I found a cheaper version for that.”
During the in-depth chat with Madhavan, Gupta said the parents should draw up a plan in the early years. The plan, she highlighted, should cover the early years of the child to primary school period to senior years in the school.
“Parents should create a life plan early on that includes their recurring expenses. The plan should outline expenses during the early years, primary school years, and the period between the child’s 10th and 18th birthdays. During the 0-5 years, childcare costs are typically high. In the 5-10 year phase, education expenses start to increase, especially if parents choose to send their child to an international school. In the 10+ phase, children may choose to participate in extracurricular activities, higher education, and tuition classes. Nowadays, children are not just focused on academics; if they pursue sports, the training can be costly. For all this, the parents need to have an every five-year plan, Gupta told Madhavan.
During the chat, both Madhavan and Gupta noted that one of the primary challenges of being a parent is ensuring a high-quality education for your child. Over the last ten years, the costs of primary school fees have been on the rise in both urban and rural areas, making it difficult for many parents to afford the increasing expenses. Some parents are even resorting to spending excessive amounts on their children’s education.
It is crucial to note the significant rise in the inflation rate in the education sector, currently standing at around 11-12%, much higher than the 6% consumer price inflation. This discrepancy indicates that education costs could potentially double every six to seven years.
Gupta also underscored the importance of teaching children today about the significance of financial literacy and responsible spending habits. She recommended that parents find a balance between meeting their child’s wants without going overboard or indulging them excessively.