Being a parent is one of the greatest joys of one’s life. But this joy comes along with additional responsibilities. As a parent, you need to facilitate your child’s upbringing through all the life stages. One of the most overwhelming things is planning the finances not only for the newly born but also for yourself, especially in the initial stages of parenting. You don’t just have to meet the daily needs of the newborn but also plan for his future, in fact, the entire family.
According to the Times of India, “Based on education, healthcare, food, clothing, entertainment, transportation, housing, and some miscellaneous expenditure, you spend approximately INR 67.4 lakh (at current value) on your child till college. If the inflation rate is 3%, this figure goes up to INR1.05 cr.”
While the overall expenditure of schooling a child in India in a private school from age 3 to age 17 is a whopping INR30 lakh, as per ET Online research. Hence, It’s very helpful to be ready for financial changes coming along.
Here are 5 Key financial changes you must make to prepare yourself for parenthood:
These tips will help you reduce financing stress and will allow you to spend quality time loving and caring for your newborn.
1. Create and invest in goals - education, marriage
We suggest that you invest in the child’s education plans right from the time they are born. It will help you eventually build a huge corpus for your child’s education and secure his future. Many insurers and financial companies today offer a children’s plan that covers the education needs of the child, including the financial expenses coming along.
Selecting a plan that best meets your needs and budget can be most beneficial. Need help with creating and investing in goals? You can contact our experts at no cost to you.
2. Plan and track your monthly budget:
The very first step in financial planning is budgeting. In this case, too it is the very first step. You have to consider your child’s expenses in your monthly budget. While budgeting, ensure you adequately estimate expenses related to his daily needs and other non-negotiable ones.
These expenses include diapers and wipes, bottles, baby formula, health, toys, clothes, etc. You can also consider maternity or paid leaves and determine ways to optimize the same. It is as important to revise the budget as it is to prepare it.
3. Emergency fund is your savior:
Emergencies are uninvited events that can occur at any time. It could be anything: losing a job, sudden or unexpected expenses, illness, etc. You never know when a normal day could turn into an emergency. Hence, having an emergency fund can be a savior! This emergency fund can reduce your financial stress to a greater extent. You can keep this amount in a single account or diversify it into multiple accounts depending upon the interest rates you receive from them.
4. Enroll your newborn in health insurance plan:
You might be unaware, but health insurance policies also cover newborns. Having a baby is a qualifying life event. The waiting period to enroll a newborn differs from policy to policy, while in most policies, you can enroll the newborn within 90 days post-delivery. If done in that timeframe, your child should be covered and will relieve you in emergency cases, allowing you to focus on caring for your child’s health.
If you don’t already have one standard health insurance plan, then you must consider buying one. There are various options in the market, but you can consult our experts[ link to contact us page] for free to help you choose the best plans. If you are already enrolled in a group or corporate health insurance plan. You cannot solely rely on it. Here’s why.[ link to the personal health insurance policy one]
5. Plan and prioritize your retirement.
Although Planning your child’s future is your responsibility, you must plan and prioritize your retirement [ link to retirement savings tips blogs]. You could have preferred planning your retirement at a later stage of life, but the very fact is it would be very difficult to secure sufficient funds for your retirement, and you can not depend on others.
The best way would be to plan for your retirement and make sound investments while planning for your child’s future. Multiple avenues like scholarships, grants, loans, etc., are available to fund your child’s education in college and higher education fees. While your savings are the only source of your retirement fund.
You must start saving now to be financially independent during your retirement.
Update your will:
Updating your Will ensures that in-case something happens to you, it will serve as a guardian for your child. Ensure your estate plan is in order, including the power of attorney and up-to-date beneficiary designations. Consult an attorney to help you understand your situation and goals and plan better strategies.