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7/27/2019 Raising_a_Child Q and A
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The real cost ofparenting:
Here is the surveyresult
F
rom food, clothing, education, hobbies and healthcare to
entertainment and caretaker costshaving a child costs you a lotmore than love and emotional energy. Moneylife offer you clues on
how to estimate and plan expenses so that the joy of parenthood is
not buried under an avalanche of financial worries
Sucheta Dalal and Raj Pradhan
Moneylife conducted a survey of 1,712 middle-to-upper class
parents. We asked them to fill out specific segments pertaining to
the age group of their childrenup to four years, five to 16 and
17 to 21. This is probably the first ever survey of this size and its
findings are pertinent to every Moneylife reader who has a child.
Read Real Cost of Parenting, out cover story.
Around 55% of our sample provided their average annual household
income figures. Only 23.9% of these reported an annual household
income of below Rs5 lakh; 28.6% were in the Rs5 lakh-Rs10 lakh
bracket, another 33.3% earned between Rs10-Rs25 lakh, while
as many as 14.3% earned over Rs25 lakh. It indicates that the
respondents are mainly upper-income households with above-
average awareness about sound financial products and investment
choices as well as prudent borrowing habits.
http://moneylife.in/article/the-real-cost-of-parenting/33615.htmlhttp://moneylife.in/article/the-real-cost-of-parenting/33615.html7/27/2019 Raising_a_Child Q and A
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Star ting with maternity, there is never a less expensive phase in
a childs life. In the early years, it is the cost of immunisation,
minor illnesses and for middle-class parents, things like diapers,
baby food, toys, childcare and birthday celebrations. But one in
three respondents had not budgeted for the increase in monthly
expenditure on the child.
Estimates of the cost of raising one child to the age of four years
vary from 10% of the household income to as high as 25%. As
many as 84% of Moneylife survey respondents felt that up to 10%
of monthly family salary went towards monthly caretaker/crche
expenses for one child.
Over half the parents were paying off a home loan (52.3%) while
37.8% did not have a mortgage. Only 44.5% of parents have even a
basic life insurance.
The Baby Years(up to four years)
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1. Do you have a child in the age group of less than five years?
Response
Percent
Response
Count
Yes 42.2% 722
No 57.8% 990
answered question 1,712
skipped question 0
2. How much do you spend on the following per month
ResponseAverage
ResponseTotal
ResponseCount
Healthcare
1,238.86 419,972 339
Food (for child)
2,187.75 741,648 339
Clothes (including diapers)
1,496.37 507,268 339
Education
3,655.52 1,239,220 339
Caretaker/Creche
1,534.65 520,247 339
Birthdays/Celebration/Entertainment
3,255.05 1,103,462 339
answered question 339
skipped question 1,373
3. What percentage of your household income is spent on these essentials for one
child?
Response
Percent
Response
Count
10% 44.8% 152
10%-25% 44.8% 152
26%-50% 8.8% 30
51%-75% 0.6% 2
more than 75% 0.9% 3
answered question 339
skipped question 1,373
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4. While planning a child did you plan for or estimate the increase in your monthly
expenditure?
Response
Percent
Response
Count
Yes 57.5% 195
No 34.2% 116
Cant say 8.3% 28
answered question 339
skipped question 1,373
5. What percentage of your monthly family salary went towards monthly
caretaker/crche expenses for one child?
Response
Percent
Response
Count
10% 84.1% 285
10%-25% 13.3% 45
26%-40% 1.2% 4
41%-50% 0.9% 3
more than 50% 0.6% 2
answered question 339
skipped question 1,373
6. What percentage of your monthly household income went towards school entrance
fee for each child?
Response
Percent
Response
Count
below 25% 69.6% 236
26%-50% 17.4% 59
51%-75% 5.3% 18
76%-100% 5.6% 19
more than 100% (how much more?
_____)
2.1% 7
answered question 339
skipped question 1,373
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7. What is the biggest expenses that you foresee per child in the next five years?
(multiple allowed)
Response
Percent
Response
Count
Healthcare 28.0% 95
Education 95.9% 325
Clothes 23.6% 80
Food 9.7% 33
Birthdays/Celebration/Entertainment 12.4% 42
answered question 339
skipped question 1,373
8. Which of the following child long term expenses are you planning for?(multiple
allowed)
Response
Percent
Response
Count
Schooling 66.4% 225
College 84.1% 285
Marriage 42.2% 143
Health 27.7% 94
None of the above 2.9% 10
Other (please specify)
2.9% 10
answered question 339
skipped question 1,373
9. Which of the following insurance do you see as a part of this planning? (multiple
allowed)
Response
Percent
Response
Count
Life 44.5% 151
Child plan 34.8% 118
Health 45.7% 155
None of the above 24.5% 83
answered question 339
skipped question 1,373
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10. Which existing loan/debt do you or spouse have?
Response
Percent
Response
Count
Home loan 52.8% 179
Car loan 21.8% 74
None of the above 37.5% 127
Any other loan (please specify)
6.2% 21
answered question 339
skipped question 1,373
11. What portion of your household income goes to loan repayment?
Response
Percent
Response
Count
No loan/debt 37.8% 128
10% 9.4% 32
10%-25% 25.7% 87
26%-40% 18.3% 62
41%-50% 5.3% 18
more than 50% 3.5% 12
answered question 339
skipped question 1,373
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As children grow up, 94% of the parents listed childrens education and
hobbies as their biggest concern. Clothes, entertainment (vacations,
gizmos, pocket money), food, healthcare and housing followedin that
order. Almost one in five respondents has paid 25%-50% of their monthly
income towards school entrance fee for each child.
Worries about the high cost of education makes
parents in this group easy targets for selling child
insurance plans. This set of parents say that they
are already saving for higher education (90%
list it as their first priority) followed by marriage
expenses (50%) and then healthcare (20%).
Interestingly, Indian parents do not see their
expenses ending with educating their children.
Some parents believe it is their duty to set up their
children in business, purchase property for them
or ensure a decent inheritance.
Depending on their income as well as the size of the family, parents estimate
the cost of raising one child at 10% to 25% of household income. Only four
out of 10 respondents are confident of having enough funds to pay the fees
of a professional course for their child after the 12th class. But 74% of
parents said that they would fund their childs education through savings.
The preferred savings instruments for their own retirement planning are
interesting. Over half (54%) prefer public provident fund and employee
provident funds. About 50% claim they invest in equity mutual funds, 46%
say its property.
The number of parents paying off a mortgage dropped significantly (to
43%). The good news is that 46% of parents did not have any loan and wereprobably saving the maximum in this segment. Only 49.6% of parents have
even a basic life insurance.
The School Years (5-16)
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12. Do you have a child in the age group of five to less than 17 years?
Response
Percent
Response
Count
Yes 44.2% 566
No 55.8% 714
answered question 1,280
skipped question 432
13. Which is the biggest expense in raising a child from five to 16 years?
ResponsePercent
ResponseCount
Healthcare 16.0% 77
Food 20.0% 96
Clothes 29.4% 141
Education & Hobbies 94.2% 452
Housing 4.6% 22
Entertainment (Birthdays, Vacation,
Mobiles)22.7% 109
answered question 480
skipped question 1,232
14. What percentage of your household income goes towards monthly school fees andhobbies, health, food and entertainment?
Response
Percent
Response
Count
10% 31.9% 153
10%-25% 46.3% 222
26%-40% 12.7% 61
41%-50% 5.2% 25
more than 50% 4.0% 19
answered question 480
skipped question 1,232
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15. Are you confident of having enough funds to pay for child education for a
professional course after 12th class?
Response
Percent
Response
Count
Yes 41.5% 199
No 22.1% 106
Cant say 36.5% 175
answered question 480
skipped question 1,232
16. Will you fund your childs education expenses through
Response
Percent
Response
Count
Your income 53.5% 257
Savings 74.4% 357
Borrowing 15.4% 74
Others 5.4% 26
answered question 480
skipped question 1,232
17. Are you preparing for your own retirement as well? If yes, please specify
Response
Percent
Response
Count
Govt Pension 9.2% 44
PPF/EPF 54.6% 262
Pension/Annuity 14.2% 68
Stock investment 38.1% 183
Equity Mutual funds 50.6% 243
Property 46.0% 221
Gold 22.5% 108
FD 31.0% 149
NPS 7.1% 34
Other 14.0% 67
answered question 480
skipped question 1,232
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18. Which of the following child long term expenses are you planning for?(multiple
allowed)
Response
Percent
Response
Count
College 90.4% 434
Marriage 50.6% 243
Health 20.8% 100
None of the above 5.0% 24
Other (please specify)
3.1% 15
answered question 480
skipped question 1,232
19. Which of the following insurance do you see as a part of this planning? (multiple
allowed)
Response
Percent
Response
Count
Life 49.6% 238
Child plan 25.4% 122
Health 40.8% 196
None of the above 29.6% 142
answered question 480
skipped question 1,232
20. Which existing loan/debt do you or spouse have?
Response
Percent
Response
Count
Home loan 43.3% 208
Car loan 17.9% 86
None of the above 46.3% 222
Any other loan (please specify)
6.7% 32
answered question 480
skipped question 1,232
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21. What portion of your household income goes to loan repayment?
Response
Percent
Response
Count
No loan/debt 43.3% 208
10% 13.3% 64
10%-25% 25.8% 124
26%-40% 12.7% 61
41%-50% 3.8% 18
more than 50% 1.0% 5
answered question 480
skipped question 1,232
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These are the years when costs really spiral,on all fronts. Here again, 94% of parents listededucation and hobbies as the biggest expense.
Costs of private coaching, hobbies, mobiles,
gadgets and entertainment (holidays with friends,eating out, movies and hobbies) rise rapidly and it
is the time when poor financial planning of earlier
years begins to be felt.
Over 45% of our respondents think that they
should have planned better for childrensexpenses, while 57% of the respondents are
worried that their financial responsibilities may
not be over even after a child turns 21. A scary
38% of the respondents said that they are tapping
into funds they had saved for their own retirement
years to pay for the professional education of theirchildren.
Only 8% of the parents had their child take an education loan to pay
for their professional courses. This underlines the image of Indian
parents being willing to sacrifice almost everything for their children.
A good 57.8% of parents have no mortgage, but as many as 30%
were still paying off home loans, in addition to meeting the high cost
of education. Only 50.4% of parents have even a basic life insurance.
The Higher EducationYears (17-21)
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22. Do you have a child in the age group of 17 to 21 years?
Response
Percent
Response
Count
Yes 16.1% 187
No 83.9% 974
answered question 1,161
skipped question 551
23. Which is the biggest expense in raising a child from 17 to 21 years?
ResponsePercent
ResponseCount
Healthcare 7.4% 10
Food 15.6% 21
Clothes 34.1% 46
Education & Hobbies 94.8% 128
Housing 3.0% 4
Entertainment (Parties, Vacation,
Mobiles, Gadgets)32.6% 44
answered question 135
skipped question 1,577
24. Are you tapping into funds you planned to save for retirement to pay for professionaleducational degree?
Response
Percent
Response
Count
Yes 37.8% 51
No 50.4% 68
Cant say 11.9% 16
answered question 135
skipped question 1,577
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30. Are you worried that your financial responsibility may not be over even after your
child turns 21 years of age?
Response
Percent
Response
Count
Yes 57.0% 77
No 28.1% 38
Cant say 14.8% 20
answered question 135
skipped question 1,577
31. Which of the following insurance do you see as a part of this planning? (multiple
allowed)
Response
Percent
Response
Count
Life 50.4% 68
Child plan 18.5% 25
Health 50.4% 68
None of the above 31.1% 42
answered question 135
skipped question 1,577
32. Which existing loan/debt do you or spouse have?
Response
Percent
Response
Count
Home loan 30.4% 41
Car loan 17.0% 23
None of the above 57.8% 78
Any other loan (please specify)
8.9% 12
answered question 135
skipped question 1,577
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33. What portion of your household income goes to loan repayment?
Response
Percent
Response
Count
No loan/debt 55.6% 75
10% 11.1% 15
10%-25% 20.0% 27
26%-40% 6.7% 9
41%-50% 5.9% 8
more than 50% 0.7% 1
answered question 135
skipped question 1,577
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