Motherhood is a joy. For an expectant mother, there cannot be a happier moment than holding her newborn in her lap. But amid all the joy, there are new responsibilities – including some financial ones. During early parenthood, many actually overlook the impact childbirth may have on their finances.
From high medical expenses to financial needs of the child and planning for the child’s future, all require adequate planning.
If you are an expectant working mom, then this Mother’s Day follow the below listed smart tips to gift your child a financially secure future.
Assess your finances before baby arrives
This is the most crucial part while planning your finances for the baby. You should assess your money needs during pre-natal, hospitalization and post-natal period. This is also the best time to make a budget based on these three crucial phases. After assessing your finances, you can start building a fund. You should also plan for unexpected situations. The government last year made 26-week maternity leave mandatory for women with full salary entitlement. You can also manage your finances better by living on the income of one spouse while investing the other’s income for a child contingency fund. Investments in liquid funds, sweep-in fixed deposits or short-term debt funds are all good options for such a fund. Living on the income of one spouse can be a good financial test to ensure you are ready to cater financially for your child.
Update yourself with maternity leave policy and benefits
Your maternity benefits depend on your employer’s policies and the duration you have been with any organisation. Usually, you become eligible for maternity leave benefits only after working for a minimum period of 80 days for your existing employer in the last one year. But this can vary and would be decided as per a company’s HR policy. Check with your HR department about the maternity leave policy and benefits available to you. This will help in the planning of your fund, time off from work, and whether you need to take up additional work (such as freelance assignments) to bridge any money shortfalls. There are some companies that also provide the benefit of working from home to their female employees beyond the 26-week window. You should also check if maternity leave can be mixed with other types of leave.
Review your health and life insurance policies
Your child will completely be dependent on you as the mother. Therefore, check your life and health insurance plans. If you still haven’t opted for a life insurance for some reason, do so now. Also, opt for a health insurance plan covering your maternity expenses. Do keep an eye on the waiting period for health insurance plans before you can avail maternity benefits. You can also provide a health cover to your child by getting them an individual policy or by including them in your family floater plan and your employer’s group health plan.
Incorporate lifestyle changes
A child’s entry into your life can impact your finances. In the first few months, your disposable income may be squeezed. To balance your finances, you may be needed to make some changes to your lifestyle. For example, no fine dining for a few months. It would be smart to incorporate these lifestyle changes beforehand to ensure a smooth transition. Your savings can be diverted to your child fund.
Revisit your loans and financial outgo
As a mother-to-be, it is a good time to revisit your debts. If you have any loans or credit card balances, or expenses that can be avoided, now is a good time to pay the loans off and shut down the money leaks. This will allow you to build a childcare corpus effectively without worrying about unwanted expenses.
Stay away from impulsive child products purchase
The child products market is a big one luring parents into multiple purchases for their child. Of course, you as a mother would want the very best for your child but not all your purchases would be useful. You can safely avoid some child products that are impulsively purchased, are expensive, or things your child may grow bored of soon. It would be wise to consult your friends or relatives who have babies less than a year ago to give you a fair idea about the budget and necessary items.
Start planning for child’s future expenses
When it comes to planning your child’s future expenses, start as early as you can. Once the baby arrives, your financial responsibilities will increase. You will have to ensure quality lifestyle, education, health and nutrition for the child. For the child’s long-term money needs for education and marriage, you can start investing in the right mix of mutual funds which will take care of your money needs when the day arrives.
Securing the financial future of your child is the best gift you can give your child as a doting mother.
Happy Mother’s Day!
(The writer is CEO, BankBazaar)