You Need An Imaginary “Third Child” To Prepare For Retirement


Knowing how much it costs to raise a child and how much joy it brings isn't always easy to compare, but it's smart to know and plan for these costs. In general, it costs a lot to raise a child, from the time it is born to when it goes off on its own. It costs between 1.5 and 2 crores. When you think about how much it costs to raise a child now, having two kids makes sense. At different points in a child's life, there are some costs that need to be paid. These are some of them. In light of the current trends, these costs are based on averages. Trading or investing can be a difficult journey without the right tools. That’s why you need the best Indian trading platform with a wide range of features. With Zebu, one of the best stock brokers in the country, your online stock trading journey will be drastically enhanced. Expenses at different stages of life There is a lot of money spent on medicines and vaccines in the first year after the birth of a child in urban and semi-urban areas. A playgroup or creche costs a lot of money when a child turns two. This could cost anywhere from 50,000 to 1 lakh, depending on how many amenities the creche has to offer. In the early years of a child's life, the cost of toys and clothes is big because they tend to grow out of them. School expenses: Based on recent trends, it looks like more than half the population of parents spend more than half their annual income to pay for their children's education and hobbies. There are times when parents have trouble making ends meet because the cost of school has gone up. A good school charges a fee of 50,000 to 2 lakh for the whole year. Expenses for the 12 years from classes I to XII would be between 11 lakh and 43 lakh if annual education costs rose by 10% each year. In addition to any tuition or extra-curricular activities that the child will be paying for, this fee will be added on as well. Higher studies: Suppose that the average cost of going to school for engineering is about 10 lakh today. In about 15 years, the same thing would cost 40 lakh to 50 lakh, too. The same thing goes for medical degrees. If they cost 25 lakh now, it's a safe bet that they will cost more than 1 crore in the next 15 years. Even though parents can take out loans to pay for their kids to go to school, the interest rate is still high, even after tax breaks. Besides paying for their kids' education, a family might have to spend money to make their home more private for their grown-up kids. Entertainment costs have also gone up a lot, especially in cities. There are birthday parties to plan, birthday gifts to buy, school cultural events, gadgets, hobbies to keep track of, and so much more to think about. In light of the above outflows, it is important for parents to plan their finances so that they don't spend more than they need to and aren't able to save for their own retirement. There are also safety nets that need to be put in place, like getting enough insurance and setting up an emergency fund. To make sure that you have a retirement fund, you can assume that you have a third child and every time you spend on your first two children, you can invest the same amount for the imaginary third child and invest it in a mutual fund. With a return of around 12-15% per annum, you will be left with a substantial corpus. You can use this as your retirement fund and can enjoy your golden years with enough funds.