The Growing Years

Life gets complex with growing children. Everything from clothes to expenses grow, so make sure you have a plan to fund their future needs.

- Anagh Pal and Preeti Kulkarni

 The arrival of a child in one’s life changes everything financially. It is an expensive proposition which lasts a good 18-20 years or more before the child is settled with a career. No wonder, for most parents, the education related costs of a child are a top priority that they worry over to fulfil, to ensure the best for their kids in life. So, besides the essentials, parents need to work on the fee at schools, any coaching that the child needs, vacations, birthday parties and the list goes on. In case of talented children, there could also be expenses on pursuing a hobby like playing a game, learning a dance form, etc.

Ask a young child what they want to do when they grow up and chances are you will hear about being a chef, pilot, businessman, singer, cricketer and so on. For parents, it is extremely difficult to get a fix on what to save for in case of their children. One of the biggest factors that impacts the future cost of education is inflation. “Typically we assume CPI or WPI as the key benchmark for gauging the increase in price in future but the fact is that these indices largely represent food and other essential commodities,” says Sachin Jain, director, Moneygain Consultants.

There is enough evidence going by available data that education related costs are much higher than the average inflation. The cost of college education also depends on the stream, specialisation, and the location of the college that one goes to. For instance, the cost of graduating in India will be less compared to say someone wanting to graduate from the US or the UK. “Just consider what you paid for your school fess versus what you are paying for your kid today,” explains Jain. It is for this reason that it is better to plan for the worse, than praying for things to fall in place.

Challenging task