Did the recent announcement about maternity benefits make you roll your eyes? Well, the sum may be debatable, but it surely is a small step in the right direction. So what happens when you decide to start a family? Or, if you’re going to have a baby in a few months?
Well, things will start looking different, and by that we don’t just mean the sight of a baby bump. Soon you will need to keep a close eye on your Credit Card purchases and Loan payments.
And it’s our job to prepare you for what’s to come, at least from a financial standpoint. We’re sure the rest will be taken care of by your gynecologist, who by the way, will also come at a price.
For now, you can sit back, relax, grab a drink of your choice and read on.
Having a baby is expensive and we won’t sugar-coat this for you. If you’re a soon-to-be parent, or are planning to start a family, you will have to consider a lot of things. To make this upcoming journey of yours a smooth one, we will take you through all the things you will need as your baby grows (even when it’s inside the tummy).
So, let’s break it down for you and divide the entire journey into two parts; Pre-baby and Post-Baby.
Pre-Baby
1. Estimate Medical Costs: From now on, trips to the gynaecologist will only increase. Moreover, there will be other expenses like medical examinations, blood tests, scans (some that cost a bomb!), and in the due course of time, hospital bills as well.
When you jot down and make estimates, you will know how much money you’ll require over the coming months. That way, you’ll have enough time to arrange for money if you’re running short.
Additional Reading: How Budgeting Can Transform Your Financial Life
2. Plan Your Maternity Leave: If you’re going to extend your maternity leave or take a break from your career, you need to prepare for it both mentally and financially. Don’t forget that very soon, your family will be reduced to a single income family if you choose to take a break or extend the usual maternity leave policy.
If you wish to restart your career at the end of your break/maternity leave, you will have to constantly update your skill sets too.
Additional Reading: How To Plan Financially For Maternity Leave
3. Include a Maternity Cover In Your Health Insurance: Medical tests, medicines, hospital charges, and delivery procedures can drain your pockets easily. Hence, it will make sense to add a maternity cover to your main Insurance Policy. Ideally this will take care of both pre and post-natal expenses, thereby easing the pressure on you.
Additional Reading: All about Maternity Cover
4. Start Saving: It all begins from here. Babies are an expensive affair and you’ll realise that as soon as you get pregnant. Starting from diapers, to formula, to vaccinations and day care, everything is super pricey these days.
Additional Reading: Money Saving Tips For First-Time Parents
Before we get into the “Post-Baby” scene, we’d like to show you a rough estimate of costs you’ll soon have to bear.
Diapers – If you haven’t already heard the horror stories of soiled diapers, we’re sure you haven’t also heard about how expensive these diapers are. A new born baby survives only on breast milk and is fed every two hours for the first few months. Now, that’s a lot of milk.
Subsequently, that’s also a whole lot of peeing (and pooping too!) So, you’re looking at around 10-12 diapers per day. The average price of a diaper is around Rs. 15-18. Say, about Rs. 150 per day, Rs. 4,500 per month and around Rs. 54,000 a year. Phew!
Other Baby things – If this is your first born, then you have a lot of firsts to buy.
A crib (roughly between Rs. 3,000 – Rs. 10,000), car seat (starting from anywhere between Rs. 5,000 – Rs. 15,000), stroller (can go from Rs. 4,000 – Rs. 15,000), high chair (Rs. 2,500 – Rs. 12,000). The other regular expenses will include bathing essentials, formula, vaccination shots etc.
Paediatrician fees – A new born baby is rather delicate for the first few months. Generally, babies fall sick easily and often, therefore a visit to the paediatrician is expected.
A one-time visit can cost you anywhere between Rs. 500 – Rs. 1,000. Now, that amount can add up depending upon how often your baby falls sick during the first few years.
Day Care – A working mom will have to get back to her desk following her maternity leave, and that calls for either a full-time nanny or day care. Nannies are not only hard to find but also charge exorbitant amounts for their services.
You will be looking at shelling out anything between Rs. 10,000 – Rs. 15,000 per month on a relatively ‘good’ nanny. The same cost applies to day care depending upon how ‘good’ they are. So, in total you’re looking at Rs. 1, 20,000 per year being yanked out from your account just like that. Oopsie daisies!
Additional Reading: Parenting – Has Your Bank Balance Grown Up Too?
Now, let’s get into the part after your baby is in the picture. The scene post-baby will require meticulous planning and execution. No, you don’t have to start sweating. Stay tuned and we’ll tell you how to nail it.
Post-Baby
1. Budget Your Single Income Household: If you’re a working couple and one of you decides to become the primary care giver for your baby, you are automatically reduced to a single income family.
In such cases, it’s absolutely important to stay and stick to a budget. Yes, seeing your baby for the first time is exciting and you may be ecstatic. But, it’s easy to go overboard with all that enthusiasm. By that we mean increased expenditure made using your baby as an excuse.
Apply the need vs wants theory and keep asking yourself these questions; Do I need it, or want it? Do I need it right now? How much do I need it? Can I function without it?
2. Start Investing: You may be comfortable with stashing those bundles of notes in your air tight flour and sugar containers, but here’s the thing. Money doesn’t multiply on its own. You wish it did though.
Additional Reading: Investments That Grow With Your Child
Start investing through some of the following avenues:
Fixed Deposits – Get a Fixed Deposit Account that lets you put away all that cash lying under your mattress. Fixed Deposits yield a reasonably good rate of interest and are easy to liquidate. It takes less time to open a Fixed Deposit Account, but lesser time to liquidate it. Check and compare the various options to make a wise choice.
Additional Reading: Everything you need to know about Fixed Deposits
Mutual Funds – Don’t let these words scare you. Most people may tell you that investing in Mutual Funds is risky. But, that isn’t true. Your risk is proportionate to the amount you have invested.
So start with a fairly small amount. SIPs allow you to invest amounts as small as Rs 500. And once you’ve learnt the tricks of the trade, you can get adventurous with it. Besides, the returns on Mutual Funds are relatively higher than any other investment plans.
Additional Reading: 10 Benefits of Investing in Mutual Funds
Savings Account – Let us not underestimate the power of this age-old method of saving. A Savings Bank Account was probably something you opened even before you learnt to open the pickle jar.
A Savings Account is a low risk, yet efficient way of keeping your money safe. These days, banks can customize a Savings Account to suit your needs depending on whether you’re employed or not. Moreover, banks offer slightly higher rates of interest than the rate of inflation on these types of accounts.
Additional Reading: Difference between a Current and Savings Account
Money Back Policy – Money back Insurance Policies, as the name might suggest, are those that pay out a lump sum amount to the beneficiary or nominee of a policyholder in case of the untimely death of the policyholder. The maturity benefits offered by money back insurance policies will be in the shape of many different guaranteed “survival benefits” that are allotted proportionately throughout the policy.
Money back insurance plans offer insurance cover for the whole policy term and regular benefits can be availed from it throughout the policy term.
Stocks: After a baby, you will have a lot of ‘firsts’. If you haven’t already invested in the stock markets, you should start now. Stock Market investing is like investing in your own economy. And when you buy a stock of the company, you buy a ‘share’ of it.
When the company does well, ‘shareholders’ are paid dividends. If you invest wisely and hold onto the shares of a profit making company, someday your child can use that money for higher education.
Additional Reading: Your First Steps To Investing In The Stock Market
In any case, if for whatever reason you fail to invest early and are in need of immediate cash, you can always avail a Personal Loan. Easy availability, minimal documentation, and quick approvals. What’s not to like about it? Right?
But, do make sure you pay it back on time.
And there you have it. A whole range of useful tips that should ensure that your finances grow as robust and healthy as your baby does.