Raising a child can cost up to Rs 85 lakh — Expert picks SIPs, PPF, Sukanya Samriddhi for set goal

The joy of bringing a child into the world can quickly be shadowed by the sheer cost of raising them in India. Financial advisor Siddhant Garg warns that nurturing a child from birth to adulthood could demand anywhere between Rs 55 lakh and Rs 85 lakh. Without proactive financial planning, parents may find themselves under immense financial strain in the years ahead.

“Most parents plan for school fees but forget that raising a child is a 21-year financial project,” said Garg. “Basic expenses like food, clothing, and healthcare alone can total Rs 15–20 lakh.”

Education remains one of the largest expenses parents will face. “Sending a child to a private, mid-tier school can cost Rs 10–15 lakh over the years,” Garg explained. “And once you add college fees and coaching classes, you’re looking at another Rs 15–25 lakh.”

Beyond academics, modern parenting often involves significant lifestyle costs. “Things like gadgets, parties, trips, or hobbies can easily add ₹10–15 lakh to the bill,” Garg said. “Even extracurriculars like music or sports training can cost ₹5–10 lakh.”

To prepare for such rising expenses, Garg strongly advises parents to start investing as early as possible. “Start a SIP (Systematic Investment Plan) at your child’s birth. Even ₹5,000 per month, compounded at 12%, can grow to around ₹50 lakh in 18 years,” he recommended.

Garg also suggests blending mutual fund investments with safer instruments for a balanced portfolio. “Combine SIPs with tax-free options like PPF or Sukanya Samriddhi Yojana for a balanced corpus. Education insurance is another way to add a safety net,” he noted.

Ultimately, Garg stresses that financial planning for children should be a top priority. “Start investing early—your child’s future is your biggest project,” he urged.

SIPs for Children

Earlier this year, Radhika Gupta, CEO of Edelweiss Mutual Fund, highlighted the benefits of opening a Systematic Investment Plan in a child’s name. She believes it not only cultivates disciplined savings habits but also aligns parents with long-term goals.

“I’ve been emphasising the importance of starting an SIP for your child, ideally as early as possible and tied to a specific goal. It’s a great way to instil sound money habits, and having the investment registered in your child’s name naturally makes you more goal-driven and committed for the long term,” Gupta shared on social media.

Over the past five years, children’s mutual funds in India have delivered an average return of around 12.62%, reflecting strong potential for long-term wealth creation. Among notable performers, SBI Magnum Children’s Benefit Savings Regular Plan posted a solid five-year return of 13.74%, with a steady seven-year return of 14.06%. LIC MF Children’s Fund, despite a recent dip and a one-year negative return of -6.37%, recorded a robust 14.71% return over five years.

Meanwhile, UTI Children’s Hybrid Fund has offered more conservative yet consistent returns, delivering 11.86% over five years. These funds balance equity and debt exposure, aiming for both safety and capital growth—an attractive option for parents looking to secure their children’s future. However, experts caution that past performance should never be the only factor in investment decisions.

PPF and Sukanya Samriddhi Yojana

For conservative investors, the Public Provident Fund (PPF) remains a trusted choice. Backed by the government, PPF offers a fixed interest rate—currently 7.1% for Q2 FY 2025-26—and significant tax benefits under Section 80C. Both the interest earned and the maturity amount are entirely tax-free, making it a safe haven for long-term savings.

The Sukanya Samriddhi Yojana (SSY), tailored for the financial security of a girl child, offers an even higher interest rate of 8.2%. The scheme matures either 21 years after opening or when the girl marries after age 18, with contributions required only for the first 15 years. Like PPF, all investments, interest, and maturity proceeds under SSY are exempt from tax, making it a compelling choice for parents planning their daughter’s future expenses.