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How to financially prepare yourself for a baby
Bringing a new life into this world is a huge responsibility- emotionally and financially. You may be prepared mentally to welcome a baby, but are you financially prepared?
Planning how much money you would need for a newborn can be confusing, but we have some simpletips to bolster your financial health before yourchild is born.
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Review your budget
It does not matter how on-track you are with your budget;it is bound to be thrown out of gear when the baby arrives. Make sure that you are prepared for this. Apart from expenses for diapers and infant food, the medical expenses may also increase. This involves frequent visits to the paediatrician, check-ups and vaccinations. The medical expenses of the mother may also increase in the initial months after delivery. Hence, financial planning for a newborn is crucial. Review your budget and check which expenses you can curb and divert those funds towards the extra expenditurefor the baby. Experts advise on increasing the monthly budget by 20-30% for the initial months after the birth of the baby.
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Consider getting a part-time job or a second source of income
Getting a part-time job can be difficult, but it can help your financial budget. You and your partner should discuss who should get a part-time job and what kind of job to look for. Either of you can capitalise on your hobby or set up a small business. However, make sure that the business capital required does not eat into your savings and that you have enough time to take care of the baby. Another thing that you need to ensure is that the second source of incomedoes not intrude on the responsibilities of your primary job.
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Prepare for your child’s future
Saving for your child should start well before he/she is born. It includes planning for their academics, higher studies, and other expenses. There are many toolslike fixed deposits, savings accounts, and child plans, which you can opt for. Analyse your needs and go for the one that seems most suitable for you. Remember to consider the premiums, the payout, the risk factor, and other charges that come with these plans.
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Take cover
Insurance is critical to the well-being of your family. This extends to your newborn child as well. Usually, life insurance policies cover a baby until 3 months after they are born. Ensure that you add the name of your child to your existing health cover as well. You can also apply for a newlife insurance policy for your child or a child insurance plan, subject to the terms and conditions of the insurance company.
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Update your documents
This is a part of post-childbirth that is often overlooked; however, its financial importance cannot be stressed upon more. Make sure that you update all your legal documents like ration card, trusts and wills. Ensure that you also add the baby to the list of nominees in your insurance plans.
These tips can help you be prepared for the baby. Being steadfast and having a disciplined approach can help reduce financial stress for you.
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