People are of a mixed opinion on the question of whether you should wait till you are financially ready to have a baby. The current generation feels it is vital that they are financially in an unwavering position before planning for a child. The older, more traditional generation believe that once the child comes, then the parents will make all the necessary sacrifices and cutbacks to provide a nurturing life for the child.

However, in this day and age, certain financial planning is essential before bringing a new member to the family. Some of the uncompromisable points are as follows:

1. Minimising debts

As you proceed in the struggle to independence, certain inevitable debts are undertaken. For instance, when you are getting an apartment or house to settle down after marriage, you go into a long-term debt.
In addition, you may also have some other loans which need repaying monthly. It would be in the best interest of the family for you to settle as much of that debt as possible before the arrival of your little bundle of joy.

2. Chalk out a budget

The household expenses go upward when a child arrives — starting from the maternity costs to childcare until the child starts going to school. During school, there is the cost of education and other charges for various extracurricular activities.

So, before having a baby, it is crucial to chalk out a budget taking into consideration all the probable extra expenses which will come your way immediately after the child is born. Taking help from friends and relatives, who have raised kids in this economy, to make the fiscal plan is a plausible idea. You may want to consider the expense of the following:

• A health plan that adequately covers maternity expenses
• Baby food
• Clothing
• Medicine
• Baby crib & stroller
• Toys

3. Get a life cover

Term life insurance, also called, pure insurance, is an absolute must-have even before marriage. Just in case you don’t have one, get good coverage from a company with a high claim settlement ratio. It is a way of financially providing for your family, for your child’s care, in the face of financial adversity in your absence. If both the parents are working professionals, both should get the maximum life cover possible.

4. Make some long-term investments

Seek advice regarding some long-term investments which should, ideally, mature when your child turns 18. Of course, you maintain a PPF account, most Indians do. However, the returns from a PPF investment cannot beat inflation when it matures 15 years later.

So, invest in inflation-beating instruments such as equity mutual funds. Experts advice to not put all your money into one investment product. Instead, diversify your disposable funds into multiple products with a healthy mix of debt and equity products.

Being financially prepared definitely helps in raising a child. It ascertains all their needs are taken care of with ease.

DISCLAIMER

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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