Plan your finances before your baby is born
The birth of your new born will bring new hopes and dreams, and a bundle full of happiness. With every step she takes and every new milestone in her life you will feel pangs of excitement too. But while you revel in the joy of becoming a parent do not forget the underlying expenses that will come along with your baby.
Doctor’s fees and vaccinations are just some of the things that are bound to spoil your monthly budget. There are many things that can happen such as an emergency operation or a complicated delivary that will force you to spend extra. It’s of vital importance that you plan your expenses well before the baby is due.
Plan beforehand:
Every couple needs to have a plan ready especially if the wife has been working. They should be prepared to survive on a single income. For the first few months after delivery, it will be impossible for the new mom to get back to work and taking a break to recover is the best option. The result of this arrangement is increased expenses and decreased income.
Test yourself for a few months before planning the baby. “Try living strictly on one income for a few months,” suggests financial planner Charul Shah of Greshma Wealth Advisors. The advantages of this exercise are – you will be able to check if you can easily survive on single income and it will also help a save some money that you can keep aside for a time of need, especially during the delivery.
If you fail, you are either not ready for a baby or need to cut down on your expenses. In an ideal situation, you should be able to manage as well as save some money for future emergencies.
Note all maternity benefits:
You need to find out what maternity benefits you are entitled to. As per the Maternity Benefits Act, a woman who has been part of an organisation for a minimum of 80 days during the 12 months preceding the date of her delivery, is eligible for a paid break of 12 weeks or 3 months. However, she cannot take it for more than six weeks before her expected delivery.
You must also check with your human resources department for other benefits and whether you can club other leaves with your maternity break. Unpaid sabbaticals are also offered by some firms. This may work in your advantage if you plan to return to work. Be careful not to violate the company’s policy, which may cost you heavily. You may even have to pay a fine to the company.
Expenditure management:
You may find all the new cool baby products enticing and irresistible but stick to necessities as your baby will soon out grow things. Most couples spend a lot on toys, clothes and cribs which usually are a waste on babies who grow quite fast.
An even better idea would be to get in touch with relatives and friends who have had babies recently and ask them to pass on used clothes. This will be useful in redirecting the money to other important things like food, diapers and vaccines.
Get insured:
It is a good idea to get a life insurance and health insurance policy done. If you or your husband are the sole earning member of the family, it is best to be prepared for unforeseen circumstances. Every expectant couple must ensure and protect themselves. If you do have a life cover, enhance it and make arrangements for the baby’s future. Getting a health insurance for your new born in case she suffers from illness is also a good idea.
Strategise your investments:
Raising a child can be a major task especially for a middle class couple. The costs involved are massive. Child education is expensive and even an elementary college graduation can cost a bomb. If your child wants to pursue a professional career you will need to save from now. Engineering, medicine or education abroad means skyrocketting costs. For such long term expenses it is important that you start planning and saving now. Start with a small amount today and slowly increase the amount over time.
Ideally, the product you choose should depend on four factors: tenure of the investment, the risk you are willing to take, the returns offered by the option, and the taxability of income.
“Typically, for a long-term goal, that is, a goal that is more than 10 years away, equity is the best option. Since the goal is several years away, it allows you to take risks,” says Sumeet Vaid, founder and CEO of financial planning firm, Freedom Financial Planners. If, however, you are not sure about investing in direct equity, you can opt for mutual funds. Take the help of a financial planner who can assist you in assessing your risk profile and choosing the right investment strategy.
Expenses grow with the child:
As your child grows so will his needs and demands. You will end up spending more on education than on healthcare once the child crosses four years of age. So plan accordingly.
With inputs from: TNN
Image courtesy: © Thinkstock photos/ Getty images
More On >> Pregnancy
