How to financially secure your motherhood
Need advice on managing expenses that accompany your new-born? Here’s help by Preeti Kulkarni
Would-be mothers do not have it easy. Health condition and physical exertion apart, their pregnancy also attracts advice, at times unsolicited, from all and sundry – on diet, exercises, commuting, medicines and so on.
What they rarely get, however, is sound advice on preparing themselves financially for the increased expenses that comes along the new entrant in their families, despite the critical role that finances play in raising a child.
Here are a few tips to soothe the frayed nerves of mothers-to-be anxious about the future:
Take stock of changes ahead
Step one is to assess your requirements and existing support system. Now, if you have parents or in-laws who can attend to your child in your absence, you have fewer headaches to deal with. If not, start looking for baby-sitters or household help right away instead of waiting until the last couple of months. “Despite the rapidly rising number of working women, India lacks a woman-friendly work structure. Therefore, having a reliable support system is a must when you are in the family way,” says financial planner Kavitha Menon. Figure out the salaries and fees of help, baby-sitters and crèche services and start planning to provide for them right away.
Review your insurance needs
Remember, most health insurance policies do not cover maternity procedures. The ones that do cover, carry a waiting period of four years as well as higher premium. “Individual health policies that cover pregnancy and the new born’s vaccinations are quite expensive. You will end up paying a huge premium throughout the tenure for covering expenses that will last one or two years,” says Menon. Enquire about maternity cover in group covers provided by your or your spouse’s employer. Do make sure that you enhance your life cover in line with increase in responsibilities. This is applicable to both parents.
Next, you need to start planning for the increase in your family’s expenses once your baby is born. The first step in the process ought to be the creation of an emergency fund. “The first 0-3 years are critical for the child and you may have to encounter unexpected expenses. Therefore, make sure you set aside approximately a year’s expenses in a secure instrument,” recommends financial planner Bhakti Rasal.
You will have to account for doctors’ fees, immunisation expenses, toys, food, clothes, diapers, medicines and so on when you modify your existing financial plan to accommodate the child’s expenses. “Even if you are a working woman now entitled to 26 weeks’ paid leave, it is not easy to budget for the huge expense burden. The only way forward is to plan for it as soon as you conceive,” says Menon. She recommends setting aside an additional amount – depending on your affordability – towards such expenses from time you discover your pregnancy. Saving through the period of pregnancy will help create a decent corpus that you can dip into for childcare costs. “Every couple will have to save a lot more than what their current financial plan accounts for. List out likely expenses every month once the child is born and earmark funds for the purpose from day one,” suggests Menon. Your plan should factor in your place of residence, fees of doctors and hospitals in the neighbourhood and so on. You can look at investing your savings in a liquid mutual fund or a fixed deposit.
Do not look far ahead
While planning for expenses related to healthcare, crèche, household help or baby-sitters is a must, do not go overboard with planning for distant future. “Initial expenses are so high that there is very little scope to plan for playgroup or school fees. You can do that when the child turns two. You and your spouse would be better settled in your respective careers by then, and hence in a better position to plan,” says Menon. Overdoing saving for the future could compromise the quality of your present.
Take care of yourself
Finally, do not allow the entire process overwhelm you to the extent that you neglect your own health and requirements. “If you are planning to take a break from work, you need to create a separate kitty to take care of your health and regular expenses during that period,” advises Rasal. This savings bucket will be over and above the fund you have created for your child and can be invested in a debt fund or a fixed deposit.