Budgeting for Children: Birth to College

Raising a child in urban India costs ₹50 lakh to ₹2+ crore from birth to graduation. Planning early makes this manageable.

The True Cost of Raising a Child

Lifetime Cost Estimate (Middle Class, Metro)

Budgeting by Stage

Stage 1: Pregnancy & Birth

Budget strategy: Start saving 2 years before, ₹8,000-15,000/month

Stage 2: Infant (0-2 Years)

Monthly expenses:

MONTHLY: ₹15,000-30,000

├── Diapers: ₹3,000-5,000
├── Formula (if needed): ₹2,000-4,000
├── Baby food: ₹1,500-3,000
├── Clothes: ₹2,000-4,000
├── Healthcare: ₹2,000-4,000
├── Daycare/nanny: ₹5,000-15,000
└── Toys/supplies: ₹1,000-3,000

Stage 3: Toddler & Preschool (2-5 Years)

Monthly expenses:

MONTHLY: ₹18,000-35,000

├── Preschool: ₹5,000-15,000
├── Food: ₹3,000-5,000
├── Clothes: ₹2,000-3,000
├── Healthcare: ₹1,500-3,000
├── Activities: ₹2,000-5,000
├── Toys/books: ₹1,500-3,000
└── Childcare: ₹3,000-10,000

Stage 4: School Age (5-18 Years)

Annual expenses:

ANNUAL: ₹2,50,000-8,00,000

├── School fees: ₹80,000-4,00,000
├── Books/uniforms: ₹15,000-40,000
├── Tuition/coaching: ₹30,000-1,50,000
├── Extracurriculars: ₹20,000-60,000
├── Transport: ₹15,000-50,000
├── Food: ₹36,000-60,000
├── Clothing: ₹20,000-40,000
├── Healthcare: ₹15,000-30,000
└── Entertainment: ₹20,000-50,000

Stage 5: Higher Education (18-22 Years)

Education Planning Fund

How Much to Save Monthly

Goal: ₹30 lakh for college in 18 years

Investment Options

Recommended mix:

• 60% Equity (long-term growth)
• 30% Debt (stability)
• 10% PPF/SSY (guaranteed + tax benefit)

Sukanya Samriddhi Yojana (For Girls)

Key features:

• Only for girl child (up to age 10)
• Current interest: 8.2%
• Tax-free returns
• Lock-in until 21
• Min: ₹250/year, Max: ₹1.5 lakh/year

Example:

• Invest ₹1.5 lakh/year for 15 years
• Total invested: ₹22.5 lakh
• Maturity (21 years): ~₹65 lakh

Monthly Budget Templates

Family with Infant

CHILDREN'S BUDGET: ₹25,000/month

├── Current expenses: ₹18,000
│   ├── Diapers/consumables: ₹4,000
│   ├── Food: ₹2,500
│   ├── Clothes: ₹2,500
│   ├── Healthcare: ₹2,000
│   ├── Daycare/nanny: ₹6,000
│   └── Miscellaneous: ₹1,000
│
└── Future savings: ₹7,000
    ├── Education fund (SIP): ₹5,000
    └── Emergency fund: ₹2,000

Family with School-Age Child

CHILDREN'S BUDGET: ₹35,000/month

├── Current expenses: ₹22,000
│   ├── School fees (÷12): ₹12,000
│   ├── Tuition/coaching: ₹4,000
│   ├── Transportation: ₹2,000
│   ├── Activities: ₹2,000
│   └── Misc (clothes, books): ₹2,000
│
└── Future savings: ₹13,000
    ├── Education fund: ₹8,000
    ├── Activity fund: ₹2,000
    └── College prep: ₹3,000

Smart Spending on Children

Where to Save

Where Not to Compromise

Activity Overload Problem

The trap: Dance + swimming + art + cricket + piano = ₹15,000+/month

Solution:

• Maximum 2 activities at a time
• Rotate activities by semester
• Free alternatives (park sports, YouTube tutorials)
• School activities often cheaper

Government Schemes & Benefits

Education

Girl Child

Planning for Multiple Children

Spacing Impact on Budget

Gap of 3-4 years:

• Reuse baby items
• Education expenses don’t overlap as much
• Easier on cash flow

Gap of 1-2 years:

• Intense few years
• But expenses end sooner
• Hand-me-downs fresh

Budget for Two Children

MONTHLY: ₹50,000

├── Child 1 (10 years): ₹25,000
│   ├── School: ₹12,000
│   ├── Activities: ₹3,000
│   ├── Savings: ₹8,000
│   └── Misc: ₹2,000
│
└── Child 2 (5 years): ₹25,000
    ├── School: ₹8,000
    ├── Childcare: ₹5,000
    ├── Savings: ₹10,000
    └── Misc: ₹2,000

Common Mistakes to Avoid

1. Over-Spending on Brand Names

Kids don’t care about brands. They grow out of clothes in months.

2. Too Many Activities

Quality over quantity. Kids need unstructured play time too.

3. Neglecting Retirement for Education

Children can get loans; you can’t for retirement.

4. No Education Fund

Starting at birth vs. age 10 = massive difference in needed savings.

5. Keeping Up with Others

Every family has different means and values.

Key Takeaways

• Start education fund at birth — compounding is powerful over 18 years
• Budget increases with age — school years are more expensive
• Use Sukanya Samriddhi for girl child (excellent returns, tax-free)
• 1-2 activities maximum — avoid activity overload
• Hand-me-downs work — kids don’t need new everything
• Don’t sacrifice retirement — children can borrow for education

Next: Budgeting for Pets — Managing costs of pet ownership.