If you are planning to bring a little one into this world, here are a few tips to secure financial planning for new parents.
Ushering a new life in this world adds a truckload of responsibilities.
The situation can get overwhelming when you do not feel competent in taking responsibility for your life and find a little one looking up to you for love, care, and affection.
Proper planning with an active action plan is essential to avoid such a situation.
As soon as you start planning for your child, becoming financially stable is essential. You have to be mindful of your actions and check how each of your actions can affect the upbringing of the little one.
Here is a list of measures you can incorporate to secure financial planning for new parents.
1. Create a new budget
Including the little ball of sunshine in your family will increase monthly expenses exponentially, especially during the initial years. Your monthly budget plan will include baby care products, diapers, food, medications, and basic monthly supplies.
As soon as you start planning for pregnancy, cut down on your investments and increase savings for urgent needs.
It is always recommended to make decisions on time, as cutting off on investments can jeopardise your future.
Instead, as discussed in this article, you can start investing in plans.
Making a detailed plan will help in making the necessary changes as required.
2. Create an emergency fund
With the birth of a child, increasing emergency corpus becomes essential.
Setting aside money for emergencies until your baby turns a year old is a good practice.
As the monthly expenses increase, it is good to increase the emergency fund.
In case working mothers take sabbaticals for pregnancy, the emergency fund will play a vital role in supporting the family's finances.
3. Life covers and health policy
Include your current expenses, liabilities, and future financial goals, and buy a term insurance cover that will take care of the crisis that arises when you are not present.
Once your child becomes 90 days old, they become eligible for a health policy.
You can include their name in your health policy if you have already brought one, or you can buy a floater health insurance policy that can cover the entire family.
Floater health insurance can be brought even if you and your spouse have individual policies or do not have any.
1. Clear your credit card debt. The first trimester includes cleaning all financial acts. Balances in credit cards generate a huge interest which can be used for new expenses. Credit card debts can also be a hurdle when applying for future loans. Boosting your credit card score can help in the long run.
2. Track your monthly spending and create a new budget that caters to the incoming needs of your new member. Whether the expenses are small or big, maintaining a spreadsheet of your expenses will help determine the expense pattern and identify the areas you will need to hold back when the baby comes. Create the new budget keeping the expenses of the baby in mind. As much as you feel tempted to enjoy a luxurious life until your baby arrives, practising austerity can provide many benefits.
3. Remove any out-of-date beneficiaries present on your insurance plan.
1. If you work in an organisation, establish contact with your HR to understand about paternity and maternity benefits you can receive from your organisation.
2. Make a checklist of childcare options you want to avail when your baby comes. Search through their referrals and identify one that caters to your needs and provides the most value for your money.
3. As you reach the last half of your second trimester, buy life insurance that ensures at least six times your gross annual salary. There are a variety of life insurance covers that you can avail of. You can also write a will to help solidify the baby's future if something unexpected happens to both of you.
Once the basic groundwork of securing yourself financially is completed, you can focus on preparing to make the future bright for your child. You can focus on saving for higher education for your child.
After your baby arrives
1. When buying clothes for your child, go big. Babies grow fast, and frequently purchasing clothes for your child will only add burden to you. Opt for a few sizes bigger than the recommended baby clothes size to make maximum use of their clothes.
2. It may sound inconvenient, but making your baby food can save big bucks in the long run. Avoid purchasing jarred foods and instead, go for your unique culinary concoctions.
3. Do not shy away from seeking financial assistance from professionals when required. If it is difficult to manage finances when your baby arrives, seek professional help to get your life back on track. They can provide valuable guidance that will aid in saving and cutting out any unnecessary expenses.
Upon the baby's birth, new financial goals will be added to the list. To cover increasing financial needs, long-term financial investments are great options.
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