Many couples now prefer to have a solid financial base before planning a family. Here’s a look at some steps you can take.
Budgeting for the baby
You should be ready with a baby budget, if possible, immediately after your marriage. Identify an amount and separate it as a fixed corpus from both the parents’ income for the baby. This saving can be put into high yielding return instruments depending on the time span after which you want to have a baby. An initial fixed deposit may be a good idea.
It is likely that you have an employer-provided insurance cover, or your personal health cover, that covers maternity expenses. Often, maternity benefits are provided by the health insurance policy after a waiting period (3-4 years typically), and up to a pre-defined limit (for example, Rs 15,000 for normal delivery and Rs 25,000 for C-section.) Determine your insurance eligibility now. You can refer to your policy’s networked hospitals to determine where you can avail cashless hospitalisation.
Clear credit card balance
Since the arrival of a new family member would entail several expenses, you do not want interest payments towards a pending card balance to drain your funds. It’s advisable to clear your dues in full before you go for a baby.
Should the birth of your child coincide with an emergency such as loss of employment, you’ll need some cash in hand to carry you through this challenging period. An emergency fund should typically be 3-6 months of your regular expenses. You should build this fund using bank deposits.
Upgrade life insurance
Becoming a parent is a big responsibility. To be ready for it, make sure you have adequate insurance coverage. Since you will have a dependent, you should provide it the protection of a term plan first. It can cover the long-term money needs of your family members.
This is one fund which not many parents give attention to. From spending on diapers, wipes to covering the cost of a nanny, this fund would come handy and take care of all those unavoidable expenses and budgetary changes which come with your newborn.
The writer is CEO, BankBazaar.com