- Pre-delivery planning While expenses surge after the baby’s arrival, costs go up during the period leading to delivery as well. Doctor visits, diagnostic tests, medicines, etc., contribute to an additional household budget. Thus, it’s important to save and invest a regular sum of money every month to take care of these costs, which will also come handy upon the baby’s arrival.
- Chalk out a budget While budgeting is the cornerstone of any sound financial plan, it assumes even more importance after the baby’s birth. As a new parent, it’s important for you to set up a separate budget to meet all the needs of your child. You can allocate a certain portion of your income towards this depending on your cash flow.
- Cut out discretionary expenses Another important aspect of financial planning after embracing parenthood is to cut out discretionary expenses and make savings in every possible way. Note that in case of a double income household, it cuts down into half as your spouse might need to take a break from work.
- Avail health insurance With rising medical costs, health insurance is an absolute must in modern times. As most health insurance plans cover maternity expenses after a certain period, it can help you bear the costs related to delivery. On the other hand, if you haven’t had a health plan, it’s important to opt for one right after your child’s birth.
Investment in liquid funds is your best bet to build a corpus to take care of present and future expenses. These funds invest in money market securities with a maturity period of 91 days and offer better returns than a bank savings account.
For example, if your monthly income is Rs. 50,000, you can set aside, say Rs. 10,000-15,000 each month for addressing your baby’s needs. Equally important is to set up an emergency corpus beforehand, which would come handy during a contingency.
In such a scenario, it becomes pretty important to get rid of discretionary expenses. For instance, instead of using your private car for commuting daily to work, you can use public transport for some days. At the same time, it’s essential to avoid taking new debt, as it can strain your finances.
If you have an existing health plan, ensure you enrol your child in it. Most policies offer coverage to a newborn baby after 90 days of birth. Planning finances the right way can help you meet all the requirements of your baby with utmost ease along with enjoying the joys of parenthood.
Learn more about Mutual Funds for a good personal financial management.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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