6 Personal Finance Tips For Your Baby’s Future
A life-altering decision yet something that is rewarding and beautiful in its own – becoming parents. Giving birth to a child may not be the milestone for everyone (and it’s completely fine) but for a few that it is, there are plenty of things to think. Most importantly, financial planning for a baby which is daunting yet necessary.
Whether you do it as per your family planning conversation or expecting a baby, you must jot down everything to the tee and ensure you are on track to managing household expenses and baby budget together. If you are looking for guidance on financial planning for a baby, here is your starting point.
Tips For The Would-Be Parents
The cost of raising a new-born child is exponentially high as the bills mount up before, during, and after the pregnancy. Moreover, unlike yesteryear, nuclear families are the norm where you will not get additional support from your parents all the time. Thus, there would be the fees of caretaker and other such supplementary expenses. Needless to say, talking about all this and your financial situation is elemental in your baby’s future planning.
Once you are on the same page with the finances and the consent of your partner, you can proceed to start looking for the best savings plan for baby, among other things. Here are a few personal finance tips for a baby future.
1. Restructure your monthly expenses
There will be added expenses when a new person arrives, but with a baby on the way, you will need to restructure and organize your entire month’s expenses. From diapers to clothes for the baby, visits to the paediatrician, the expenses quickly add up. Thus, when you start your savings for baby, you need to incorporate these expenses.
Increase your budget to at least 10% every month and factor in the decrease in income if one parent decides to take time off work or freelance.
2. Keep aside money for one-time investments
Create baby savings account well before the due date, so you have enough in your account when you need it. Moreover, if you are a first-time parent, it is advisable to invest in one-time products like cradles, car seats, swings, and the likes to better prepare for the next child. All of these one-time investments amount to a lot. Thus, creating a Fixed Deposit for the same beforehand is visionary and helps you get through the major expenses with ease.
3. Revise your life and health insurance plans
One of the most important investments for baby will be their health insurance plan. Your new-born baby will be eligible for one after 90 days from his/her birth. However, you need to even out the technicalities of how you are going to enroll your child on your existing family health plan with your insurance agent. Of course, you can always go for a completely new plan depending on what suits your budget and long-term plan.
Moreover, don’t forget to ensure that you and your spouse is covered under good life insurance. This will ease off some of the stress of welcoming a new human in the world.
4. Open a Savings account for Your Child’s Education
While some parents wait it out until their child is at least 5-10 years old, we recommend going for the baby’s savings account from the birth itself. Of course, you cannot know what career your child will embark on. But calculate the current college fees trend, add 10% inflation to it and set up a savings account for your baby.
In a year or two, you can start investing in mutual funds bound to yield better returns by the time your child goes to school/college.
5. Do away with debt and build an emergency fund
Before charting out a baby budget, it is extremely important to do away with all your existing credit card EMIs and debts. Also, create an emergency fund well before the baby’s birth to help you tide over time when one parent won’t be working. Anything between three to six months’ worth of salary is ideal for the emergency fund.
6. Write your will
It is not the top priority when you are thinking about your new family and how you will shower your child with love but writing your will/estate is also part of the responsibility of raising a child.
Assign a trustworthy person as the guardian of your minor children in the unforeseen event of something that goes wrong with you. This puts your child’s future in the right hands. If you fail to do this, a court will appoint a guardian who will not be under your control.
When it comes to raising a child, there are plenty of things to take care of. But planning for their future and taking care of your finances should be on the top. It helps you in spending time with your little bundle of joy without any worry.