Raising A Child Costs Rs 55-85 Lakh In India: How To Build A Corpus With SIP, PPF And SSY?

In a LinkedIn post last year, financial advisor Siddhant Garg highlighted a reality many parents underestimate - the true cost of raising a child. According to Garg, nurturing a child from birth to adulthood in India could require anywhere between Rs 55 lakh and Rs 85 lakh, depending on lifestyle choices, education preferences, and inflation. Without structured financial planning, parents may find themselves facing significant financial pressure over time.

The Biggest Expense - Education

Education remains one of the largest financial commitments for families. Garg noted that enrolling a child in a private, mid-tier school can cost between Rs 10-15 lakh over the schooling years. When higher education, professional courses, and coaching classes are factored in, parents may need to set aside an additional Rs 15-25 lakh.

Lifestyle And Extracurricular Costs

Beyond academics, modern parenting often includes substantial lifestyle expenses. Gadgets, birthday celebrations, vacations, hobbies, and social activities can collectively add Rs 10-15 lakh over time. Extracurricular activities, such as music lessons, sports coaching, art classes or specialised training, may require another Rs 5-10 lakh.

Start Investing Early

To manage these rising costs, Garg strongly recommends beginning investments as early as possible. "Start a SIP (Systematic Investment Plan) at birth," he advised.
For instance, Rs 5,000 invested monthly at an assumed 12% annual return over 18 years could potentially grow to nearly Rs 50 lakh through the power of compounding.

His broader advice includes starting a SIP at birth, adding safe instruments like PPF(Public Provident Fund) or SSY (Sukanya Samriddhi Yojana) for tax-free wealth creation, and combining investments with education insurance for added security

SIPs For Children: Why Time Matters?

The most powerful factor in long-term investing is time. The earlier parents begin saving, the smaller the monthly contribution required to build a substantial corpus. Compounding allows returns to generate additional returns, significantly accelerating wealth creation over 15 to 20 years.

Over the past five years, children-focused mutual funds in India have delivered average returns of around 12.62%, reflecting their long-term growth potential. While mutual funds carry market risks, their long-term track record shows potential for disciplined investors.

PPF And Sukanya Samriddhi Yojana

For conservative investors seeking stable and government-backed options, the Public Provident Fund (PPF) remains a trusted choice. Currently offering an interest rate of 7.1% (Q2 FY 2025-26), PPF provides tax benefits under Section 80C. Both the interest earned and the maturity amount are completely tax-free, making it ideal for long-term goals.

Meanwhile, the Sukanya Samriddhi Yojana (SSY), designed specifically for the financial security of a girl child, offers a higher interest rate of 8.2%. The scheme matures 21 years after opening or upon the girl's marriage after age 18, with contributions required only for the first 15 years. Like PPF, SSY investments, interest earnings, and maturity proceeds are entirely tax-exempt.