HOW TO MANAGE FINANCES AFTER THE BIRTH OF A CHILD
1. Ground reality
· There comes a time in your working life when you are blessed with your first child.
· You then realize that this will change your lifestyle and impact your finances too.
· While your expenses go up, you will also have to start thinking about saving for the child’s future.
2. Make a budget for the child
· To balance the two, start by making a budget for the child.
· Focus on what is essential, rather than overspending on what you would like the baby to have.
3. Increase your insurance
· Given your new responsibilities, you must also check if you have adequate insurance.
· Do not take any life cover for the baby as you are not dependent on him.
· Instead, increase your own life cover to secure your newborn too.
· Include the baby in your health insurance cover for the family as soon as possible.
4. Saving for the baby
· While starting to save for the baby, take your investible surplus into consideration.
· Do not sacrifice any of your long-term goals, such as retirement.
· If you do this, you will lose out on the compounding benefits and will end up with a smaller corpus than the one you need.
· In such a case, postpone saving for the child for a few years.
· To make up for lost time, you can save a larger amount when your income improves.
5. Auto payment mode
· Once you start planning for the child, there are chances of missing out on payments and dues.
· So, put your EMIs, credit card dues, utility bills and taxes on auto payment mode through direct debit instructions to banks.
· This will save your credit score getting impacted which may have long-term consequences.
6. Prepare a will
· Prepare a will so that your child is protected in case of your untimely demise.