Parenthood indeed makes you feel at the top of the world. But it brings in a lot of changes in one’s life. One of them is a change in your financial status. It is important for the parent/parents to give enough thought to the financial plan considering this change.
You have to evaluate your income and expenses before your bundle of joy arrives and plan necessary adjustments so that the new member in the family does not change anything drastically. Budget for the child and the expenses you will incur on healthcare, vaccination, daily baby needs etc. once you become parents. It is essential that you stick to the budget.
Here are some important things to consider –
- As soon as the baby is born, you need to include him/her in the medical/health insurance plan that your company provides so that unforeseen contingencies are provided for at least from a monetary perspective.
- You are very happy and on an emotional high when you become a parent and companies use this to the full extent. There are many marketing gimmicks which tempt you to spend on a lot of products which might not be really required for the child. So even though you might want to splurge, it is advisable to list out the needs and the wants and spend wisely. It is always better to spend more time with the child than money on the child.
- Your financial security is very important for the well being of the child. Therefore it is important to have a proper financial plan and execute it such that your financial goals are on track. There could be changes in income patterns. For example, if both parents are earning members and one parent decides to take some time off work to take care of the child, it could mean reduced earnings and this should reflect in the financial plan.
- It is important to revisit the retirement goals and ensure that the plan of action for retirement is on track as it will be a big help to your kid that you are financially secure in your sunset years and he/she can get on with his/her plans.
- It is important to insure the parents so that resources for raising the child are there in case of unforeseen circumstances.
- You can also think of tax saving options when you become a parent. You can invest in your minor child’s name and if this investment generates an income, it is clubbed with the parent’s income. However, you can claim upto Rs. 1,500 per child as a deduction in your income.
- It is important to include the child in the will made. You must have at least some investments where the nominee is the child so that there is a sort of a financial backup in case of emergencies.
Children are the biggest investment that one can make and one should plan for them appropriately. Let us know what steps have you taken to ensure financial security for your children along with you.
It is important to have a financial plan in place before your child arrives. One should budget for the child’s needs for the first 6-12 months and ensure that the budget is followed strictly. Revisit the financial plan to ensure all goals are aligned and you work towards your targets. #gettingyourich