Here are some financial planning tips for new moms to help you get your finances on track for a worry-free future.
Before we start, here is wishing you your first Happy Mother’s Day! Motherhood is a beautiful journey that comes with its joys and challenges. One such challenge or rather an adjustment that you need to be prepared for is on the financial front. Thankfully, your financial woes can be addressed by making a few tweaks to your already existing plan.
Written ahead are some financial planning tips for new moms to help you get your finances on track for a worry-free future. Read on:
#1. Create a Budget
Adding an extra member to the family calls for an immediate re-look at your existing budget as the child care costs add up. Hence, even if you had a comprehensive budget before, revisit it and create a budget that factors in your latest essential costs and de-prioritizes the avoidable expenses. Remember, the budget should be flexible and allow you room to save some funds every month. You can look at various online budgeting tools that are available free of cost to keep track of the inflows and outflows.
#2. Double Your Emergency Fund
Having a contingency fund is always a good way to cushion yourself against uncertainties. This might also be a good time for you to double your emergency fund or start a new fund if you haven’t built one already. This can help you take care of unprecedented expenses that often accompany child care. You can look for liquid funds for this as they offer higher appreciation compared to a savings account and also, as their name suggests, offer easy access to your money when you need it.
#3. Start Investing For Your Child’s Future
With rising costs of higher education, it is important to start investing in avenues that offer your inflation beating returns to amass a sizeable corpus for your child’s higher education needs. Starting early gives you sufficient time to spread out the financial load, gives you the benefit of growing wealth rapidly due to the effect of compounding and also spreads out your risk. You can start a SIP in a diversified equity portfolio after calculating the amount you need for your child’s education. Remember to always factor in inflation while arriving at the corpus. There are many platforms which can help you get the right resources, both in terms of education and investing ease to get you started.
#4. Protect Your Growing Family
With a tiny human depending on you, it is important to ensure that his/her life carries on without any hindrances even if something was to happen to you. Hence, insurance (life and health) should be one of the first things on your mind. The sooner you get an insurance policy, the better it is as you would get optimal premium charges and a chance at achieving adequate coverage. Do compare various options and the add-ons they offer before taking a call.
This is new and you are bound to feel overwhelmed at times. However, by planning your finances well, you can ensure that you give most of your time and attention to your child and not worrying about providing for him/her.
(By Harsh Jain, Co-founder and COO, Groww)