Financial Planning for a new-born baby
Planning a baby can be euphoric and marks the beginning of an era in your family. It also brings the feeling of the end of the joy ride! Perhaps, the end of the fun and the start of the feeling to start squeezing your expenses!
It 's nice to start to feeling the need of proper prior financial planning when planning a baby. You may be now wondering about the costs involved. You may be thinking about how much money should be enough.
For making a financial plan for your baby, if you were looking forward to a list of all possible expenses, then this blog is for you.
Couples who come to me for this particular goal in mind, are eager to know all the expenses involved. Right from childbirth to post-natal care, what can be the greatest possible cost? With latest medical advances, preventing childbirth complications brings newer unseen sudden expenses. When the husband takes extra precautions for eventualities in advance, the wife feels satisfied.
Unplanned and unforeseen expenses can put at risk your financial planning. They can take away the excitement and the joy also. You then start looking for alternative sources of taking out money now required. Leaving such events in life unplanned can cause estranged relations. Perhaps, a black spot in your relationship too!
There can be financial planning steps to create a balanced list of taking care of the money. This blog provides the top to do and to avoid points. A useful list of all such related ideas in one place.
My current and old clients have used this list for their newborn children's expense list. This list may not be complete but is a "lighthouse" when you venture into the rough seas of starting a new life. A "lighthouse" to tell you to avoid hitting rocks! Rocks, which could be blocking your endeavors to building your child's secured future. "Lighthouse" which keep beaming the light to keep you away from unnecessary financial burdens.
With my client's experience and feedback, financial planning for a baby becomes imminent. I have seen the most spend-thrift parents start planning the finances. They start calculating all kinds of expenses that could now in involved.
With pre-emptive steps taken, they were able to avoid all such kind of stress. What could be these steps and what could be these related expenses? Can someone make an estimate and give a budget for total baby related expenditure?
For making financial plans for your baby, Let's first look at all the kind or category of expenses which need planning:
- Pre-child birth: Ultrasound, Medication, doctor's fees.
- During Delivery: hospital, admission, Daycare hospitalization, doctor's fees, operation and surgery charges.
- Post Childbirth: baby clothes, baby accessories,
- In Hospital: Post-natal care, Premature birth expenses,
- Outside hospital: Miscellaneous expenses
- Maternal and Paternal pregnancy leave: As the baby arrives home, make a plan for a decrease in income and increase in expenses.
- Travel expenses: If the mother of the child needs to move to hometown and back; to and fro hospital.
- First one Year after childbirth: Baby clothes, Cribs, Strollers, feeding bottles, baby food, baby medicines, doctor's visits, vaccinations, tonics, vitamins, health check-ups, diagnostics tests.
- First four years: growing up baby clothes, baby toys, baby accessories, baby car seats.
- Pre-School: play school admission fees and monthly tuition Fees, bags, books, toys,
- School Fees: Admission fees, bus fees, tuition, books, toys.
While every expense above could vary from one city to another, it may also depend on your family beliefs too. Such a financial planning could be the base for building your exact expenses list.
A lot of my clients have planned a child to try to include the maternity expenses covered under an insurance policy. Is this possible? Well, there are limited options if you are an individual and seeking a health insurance policy for yourself and your family.
Maternity benefits get covered if you have taken a particular health insurance three years before the actual delivery date. Some insurance companies are paying up to Rs. 30,000/- and Rs. 50,000/- for normal delivery and caesarean delivery respectively.
Besides, they also cover pre and post hospitalization benefits also.
However, the best utilization can be to include your new baby hospitalization expenses up to 90 days and then option to include the child in the primary policy also. Some insurance companies offer to include all the first year vaccinations for the newborn baby without any additional cost. Also, severe issues like congenital disorder or any critical illness of the child may need further expense provisions. Some insurance companies cover the last feature also.
Does such financial planning for a baby have any positive side effects?
It would bring the satisfaction when you have not have thought of such expenses in advance!
When the husband and wife make such plans together, it brings them closer! By aligning thoughts about any future events, could bring confidence and exhilaration too.
When the wife sees the husband so concerned and involved in such matters, the woman feels secured too.
This insecurity feeling is bad. Any event, which is future and not earlier experienced, cause anxiety and increase stress.
Creating plans for a future event which has not happened earlier in your life brings deja vu. A once in a lifetime experience. Then why not make it even more exciting and planned.
When you plan finances for a baby, you create another layer of excitement in relations. Another attempt to show to your wife, that you care and are around. This opportunity comes once in a lifetime and doesn't come for everyone.
With this kind of planning, brings an opportunity to align all your relevant resources. You have to identify the sources of the type of available saving that can be "mapped" to this future event.
Now, if you come to know that, your current saving is not going to be enough, you now have the time to start savings. Then start investing appropriately after understanding the gap.
Based on the time horizon, like two years or few months, you can start investing in short-term debt plan. Perhaps a debt mutual fund which is liquid, safe and provides decent returns of 1 or 2 % above prevailing FD rates.
It is not the money alone, which matters. Starting to invest for this particular goal, inculcates a new habit. It is a good habit of saving systematically every month also.
Go by professional opinion of a financial planner to understand all the avenues to save for this goal. Don’t go by your people or friends tell you. This decision is an important event in your life and doesn't take chances.
Creating an emergency fund, at this stage, is also a good idea. To keep aside six months’ household expenses may prove to be a splendid idea. If not done, make this separate investment in your savings account or better in a debt fund.
While doing all these financial planning for a baby, making your spouse completely aware of the above developments can be a reassuring idea. To have "either" "or" signatories in all your bank accounts is a good idea.
Making a flow chart of what and which event will need how much money, will ease your mind. You can download this Flow Chart to keep handy.
Planning events like a baby shower, to a new-born party, are individual choices. Based on your personal preferences and beliefs, plan all such events with your spouse. Taking your spouse and available resources (money) is a trust building exercise.
Keep all future events aligned to your family beliefs, and with your values also. Continue to seek the right paths to what you believe and what you both want. What your resources allow and what you have now planned, is your ethos. Don’t try and copy what your friend did on such events and how he did it. Your joy and happiness can come from small caring and excellent planning.
Money cannot bring all the joy! Showing to your wife, that you care, can make a huge difference. Spending alone is not enough. Demonstrating that you do think, about small things, matters. Small gestures go a long way in cementing relations, which has just perhaps started.
With your new fond love and passion, for little details, starts your own value Systems.
Value systems built now around your family and what bring joy. These are small things which now may make spouse believe in you. Believe that you do care. Beliefs now bring a new way of life, for the little one to come into your family.
The new family member brings additional responsibility for you to consider. Responsibility refers to your abilities to respond as and when situations arise. Your spouse now understands that you have those abilities to respond to any emergencies.
A new arrival in the family can be the time to develop your family mission and vision statement. ON how you want your child to be and what values would you like him or her to imbibe.
As your child grows, from age one to hour, he or she starts to learn your language. (Here, your language refers to your values and beliefs). Moreover, the language here pertains to what matters to you and what does not matter.
Be clear on your belief systems as the child starts imbibing your habits now. It then becomes habits on how and what you start spending money. These patterns, later on, start determining what you would not like to spend money. These new habits make you again plan all future events too.
Future events in life could be preschool expenses. Giving away money just to get your child to the so-called prestigious school, can be your way of life. However, ensure that your child gets admission, on what he has learned and what his abilities are. Your value systems here determine significant expenses.
The financial plan, for your child's school expenses, is a matter of monthly fees.
Now is the time for planning for your child's higher education and marriage.
The above completes the full cycle of events started with financial planning for a baby.
Financial planning is not a one-time exercise but a regular affair. Regular check to ensure that all goals are in line with your investments. Continuous upgrading and rebalancing bring joy also.
Financial planning for a baby is a unique opportunity in your life. May the joy of making such plans now evolve into a joint program. May this joint project be a new found love. May the new love, be an eternal bliss. May the happiness be eternal with you!