The news of the arrival of a baby is one of the happiest moments in the life of any couple. Parenting sure is a huge responsibility and each of us wants to give the best to our children. While we all try to be the super parent in our own unique ways and strive to give the child our best, one must remember that becoming a parent is not just restricted to changing diapers, feeding or dressing up the child or sleepless nights.
Another aspect of parenting which each of us are aware of and yet unprepared is that raising a child calls for huge financial preparedness. Many of us decide to start a family only after we feel we are financially ready to support the child. However, financial preparedness for a child is not just about reaching a certain income level; it is much more than that. One has to start planning, have a savings plan and also look at investing and building a corpus for the future needs of children. One has to also look beyond the regular monthly extra expenses which come with the arrival of the child and start planning for those bigger milestones of life such as higher education, marriage or even not so pleasant medical emergencies.
Financial Tips for a Super-Parent:
Here are few tips, which can be extremely helpful financially for new parents or parents-to-be on the block:
- Cut expenses:
First and foremost, start cutting down on unnecessary expenses. No, not asking you to be a miser but you can sure skip a movie outing and lavish dinner once a month. You would be surprised how much you end up saving if you act a little wise.A very common behavior in any couple who just discovered their joy; they go overboard on shopping for kid’s clothes, toys, and nursery. Again, good to be excited but it is always good to do so in moderation. Also, as the child grows older, he would have his or her own demands, so you would be better off saving for those future demands.
Any easy thumb rule to follow is to save at least 15% of your family income, every month.
- Buy a Term Plan: NOW
Make sure you have a good term insurance plan for you and your spouse. One must never mix insurance with investments especially now when you are going to start a family. It is extremely important that you have enough cover to protect your child in case of unforeseen calamities. People often buy a term plan for their child as the life insured to save petty amount on the premium which is a huge mistake. Remember, your child is dependent on you and not the other way round, so it is important for the parents to have a term plan on their name.
Term plans can be bought online and can give you a large life insurance protection at a very low premium.
- Family Health Insurance:
Apart from life insurance policy, you must have a good health insurance plan for the entire family so that medical emergencies do not take a toll on your finances. Newborn babies are susceptible to diseases and hence it would be good to buy a good health insurance plan for the family.
Even if you have a group cover in office, it helps to take a separate personal family cover.
- Pen your Financial Plans:
Start long term financial planning for your child as soon as possible. Many of us miss out on financial planning for future goals such as primary and secondary education, marriage and so on. Building a corpus for such goals is extremely crucial because as and when they arrive the outflow is huge and one will also have to keep inflation in mind. However, since milestones are usually 10 or 15 years, you can start by investing the small amount and gradually increase the quantum. - Review your Goals:
Reviewing your financial goals and remapping them according to the changing need and situations is equally important, at least on a yearly basis.
You can look at investing in a mix of products like equity either directly or through mutual funds, fixed income products, and other child-centric investment plans specifically designed to meet these specific goals and help ease off the pressure later.
