Starting a family is an exhilarating time in anyone’s life. As exciting as it sounds, raising a child is not easy, emotionally, intellectually and financially. Planning a family often requires you to revise, revamp or review your finances. Therefore, whether the new arrival is planned or not, having a financial plan in place is going to be crucial.
Following these four financial tips will help you to live the life you want while providing for your child now and in later life:
- Consider Your Budget and Lifestyle Changes
With a new baby in the house, you can expect higher expenditure, especially in the initial months. So, as you start to prepare for those inevitable expenses, evaluate what your monthly budget looks like today. Perform a budget analysis that breaks down your monthly savings, fixed and variable expenses and take-home income to identify areas where you can cut costs and boost your savings.
And depending on your personal circumstances and income, make changes to your budget to cater for having a child. After all, it boils down to planning well to give your little one everything they need.
- Review Your Existing Insurance Policies
Insurance is not the most cheerful subject, but certainly one of the most significant. When you live a single life with no dependents, life insurance can feature near the bottom of your financial priorities. However, having your first child should act as a trigger to get cover in place or increase the same if you already have one. Here’s why:
If you were to suddenly pass away tomorrow, would there be enough financial support for your kid? Term insurance plans pay a lump sum to provide financial security if this were to happen.
Purchasing term insurance to cover your salary won’t be as hard as you think. Getting a 1 crore 30-year term insurance plan for a 30-year-old male, for example, averages to around Rs. 700-800 per month, which isn’t too pricey.
- Start Saving Up for Your Kid’s Education
Your bundle of joy will grow up really fast. One day, you will be holding them in your arms for the first time, and next, they will grow up, ready to pursue higher education. This very thought is enough to make any parent emotional.
Therefore, start saving for their education right from the time your child is born. This way you can build up a good base before you must pay for their higher education fees. There are a number of savings and investment plans specifically designed to help parents save for their child’s education. With a special education product like child investment plan, you might be better off in a flexible situation to set aside for college, thus, having greater peace of mind.
- Plan Your Retirement
Your retirement is one of the thoughts you must focus on before you have a baby. Why? Because it’s tempting to focus on the needs of your child and forget your long-term plans and personal goals. You don’t want to pour all your funds into your children and then leave them in a situation where they must support you in your golden years. It’s a common misstep to focus your finances around your children at the expense of your own retirement savings.
The best way to care of your kids is to take care of yourself because they count on you to be there for the long run. So, start saving and investing towards your future and achieve retirement readiness.
Adding a new family member may come with a long list of demands, and it’s not unusual to be overwhelmed by the many responsibilities.
“Child’s education fund or save for your retirement? Mutual funds or invest in more life insurance?”
You will have to prioritise, based on your family needs and income. Our advice is to prioritise life cover and medical needs.