Raising_a_Child Q and A

7/27/2019 Raising_a_Child Q and A

1/16

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.html


2/16

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)


3/16

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




4/16

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



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




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




5/16

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



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



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





6/16

10. Which existing loan/debt do you or spouse have?

Response

Percent

Response

Count

Home loan 52.8% 179

Car loan 21.8% 74


Any other loan (please specify)

6.2% 21



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




7/16

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)


8/16

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


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



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




9/16

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



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



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




10/16

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


Other (please specify)

3.1% 15




allowed)

Response

Percent

Response

Count

Life 49.6% 238

Child plan 25.4% 122

Health 40.8% 196





Response

Percent

Response

Count

Home loan 43.3% 208

Car loan 17.9% 86



6.7% 32




11/16


Response

Percent

Response

Count


10% 13.3% 64

10%-25% 25.8% 124

26%-40% 12.7% 61

41%-50% 3.8% 18





12/16

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)


13/16

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


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



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




14/16


15/16

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




allowed)

Response

Percent

Response

Count

Life 50.4% 68

Child plan 18.5% 25

Health 50.4% 68





Response

Percent

Response

Count

Home loan 30.4% 41

Car loan 17.0% 23



8.9% 12




16/16


Response

Percent

Response

Count


10% 11.1% 15

10%-25% 20.0% 27

26%-40% 6.7% 9

41%-50% 5.9% 8




Documents

Raising_a_Child Q and A