6 Financial Planning Tips for Parents-To-Be
Define your expenses
Start by defining the different types of expenses that will be incurred regularly once the baby arrives, such as postnatal care, toys, baby clothes, and day-care. Some of these expenses might start earlier than others and knowing them in advance will help integrate them into your overall financial planning.
Draw up a budget
Prepare a budget to ensure that you cover all your needs without exhausting your savings. Get creative and try to limit some other expenses so that you can cover child-related costs without overshooting your financial limits.
Revisit your emergency fund
You may already have an emergency fund in place, but revisit it now that you have more responsibility on your shoulders. While the fund may cover your current lifestyle, it may not be enough to meet your growing expenses as a new parent and fulfil the needs of your child.
Get sufficient insurance
Insurance is an essential tool to protect your family from crises. If you are not already insured, get life coverage for yourself, your spouse, and your child. If you are already insured, check your sum assured and your coverage to ensure it will match your family’s financial needs in case of an adverse event. In particular, get a family-friendly health insurance plan to cover medical and hospitalisation expenses for your family.
Save for short-term financial goals
Start saving at least for short-term financial goals such as your child’s admission into kindergarten, or a bigger family-friendly car.. You could even start a SIP in suitable mutual fund schemes to get market-linked returns on your investments.
Invest for long-term financial goals
Begin to keep an eye on long-term financial goals such as your child’s higher education, marriage, and your eventual retirement. Let your money work for you by being smart with your investments – basis your risk appetite invest in potentially high-return instruments like equity mutual funds to realise major goals 20 years down the line. The earlier you start planning, the better you will fare later.
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