Generally, couples should plan their financial future in advance. This must be including times when they are planning a baby. Having a baby involves the largest part of financial spending which may require a lot of preparations. Every possible step towards saving and investing must be explored before the baby finally arrives. It is even more important even you’re working and planning to quit to have a smooth time of birth. Of course, this will impact your family income considerably as now only one single person will be earning instead of two members.
Much before birth, it’s important to plan your baby’s long term milestones like higher education, first job, marriage, etc.
Start by your splitting up the pre-delivery and post-delivery phase :
Pre-delivery planning– Once you’ve planned your family, a humongous number of medical expenses take over. All charges for regular check-ups, diagnostic visits, frequent hospitalization are many. It’s good to start with a small amount on a monthly basis into a liquid fund. Ask your employer for individual or group insurance whichever applies best. Personal health plans usually have low maternity coverage and high premiums and waiting period ranging between 2-6 years. Company-sponsored health insurance is always easy to access & use. They can offer better services at affordable costs & efficiency. Also, it’s much easier to close final documentation to complete cashless reimbursement, in at all the option is offered.
First of all, find out about the number of maternity leaves in your company kitty. Understand if the number of maternity leaves is fully paid and if there’s scope to combine all other leaves in your account (casual, sick or privilege). If in case, it’s a good possibility then you’re almost sorted.
It is clear to build an emergency fund which can be used for both medical & non-medical expenses out of arising needs. This kind of fund should have an amount equal to 6 to 9 months of household expenses.
To lay down a constructive plan, set-up a budget in accordance with your financial estimations. This will ensure a smoother flow of cash. Also, strictly add all the expenses like baby products and services, financial instruments to brighten up your unborn’ s future and important investments to meet your needs *child-related*. Your estimations may turn out different from the actual expenses later but it will provide an insight into your overall costs in times to come.
Post-delivery planning- Try your hands on a life insurance plan for family and child coverage. If a term plan is your choice, then buy for a tenure between 8 to 10 times of your yearly salary. Under an individual policy, every member has a fixed sum insured whereas in the case under an umbrella plan, the insurance cover is shared. The family floater plan is always cheaper than any individual plan. Therefore, opt for the most convenient & cost-effective family plan.
Next in line would be to take care of the urgent and long-term goals for your baby. You can choose between an equity and equity diversified mutual funds or equity-linked saving schemes (ELSS), for equity, and for the debt instruments, choose between public provident fund (PPF), gold bond scheme and Sukanya Samriddhi Scheme. Also, to meet other short and medium-term goals, you can choose from liquid funds, ultra-short-term funds, recurring deposits, fixed deposits, debt funds, so on and so forth.
