Just Became A Mom? Here's What You Need To Do - Financially Speaking
Be sure to avoid the common mistake of being so over enthusiastic about planning for your new-born's school and college tuition that you compromise the 'bookends' of your Financial Plan - namely your short term emergency corpus, and your retirement
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Childbirth is that magical event which leads to the birth of two new people - of your child, and of you as a parent. Amidst the heady sensations, the proliferation of congratulatory messages and the sleepless nights, it's very easy for you to ignore a few critical aspects of your personal finances that you now need to address quickly. Here are the most important ones.
Include your child into your Health Coverage
For starters, you'll need to include your new-born into your Health Insurance plan. Most Health Insurance plans have a minimum 'age at entry' of 3 months, and it's highly recommended to not delay this step - given that you'll already be stretched financially and a medical emergency is the last thing you'd want. If you and your husband are both covered, compare policies to figure out which one has the most affordable 'family' coverage.
Up your Life Insurance if required, or encourage your husband to do so
Bear in mind that the arrival of your little one has just dramatically altered your dependency matrix! So, while you're up attending to a screaming child one of these nights, spare a thought to all the ways you could die prematurely and how this would affect your child's future. Take time to rework the value of your optimal life cover (for both you and your spouse) after accounting for your increased expenses, your share of contribution to these expenses, your child's 'life critical' future goals such as a good education, and so on. Take out a pure term policy to bridge the gap
Budget for your new expenditures
As a young parent, you'll likely find yourself running short of money as you dole out money for new household items ranging from diapers to baby food - and this could run into thousands of Rupees each month, not considering the exorbitant sums charged by most paediatricians nowadays! Couple that with the fact that you might have worked earlier and would now like to be a 'stay at home Mom', and you have a recipe for strife. Rework your monthly budget to figure out what budget cuts to make to be able to account for the increased amount.
Re-work the 'bookends' of your family's Financial Plan & be realistic about college planning
Be sure to avoid the common mistake of being so over enthusiastic about planning for your new-born's school and college tuition that you compromise the 'bookends' of your Financial Plan - namely your short term emergency corpus, and your retirement. Your retirement might be a long way off, but it would be foolhardy not to understand how inflation will create the requirement for a monster size corpus at that stage of your life! Plan for all your life events in a balanced manner and remember the loan option (although ill advised!) will be available to fund at least part of your kid's college tuition.
Don't forget to 'budget for fun'
It's easy to get so lost in the humdrum of parenting responsibilities that you ignore your 'fun' budget. Do this at your own peril! Movies, vacations, and dinners out are investments in your relationship with your husband and will go a long way in ensuring that you all lead a harmonious family life together. Plug your financial leaks so that you can create an adequate allocation for this seemingly innocuous - but critical - aspect of your shared personal finances as parents.