When the news of your bundle of joy’s arrival spreads, it brings immense happiness in your life. And suddenly you realise that you are not only responsible for yourself, but also for your child who will depend on you for all his/her needs.
New-born babies have a magical way of zapping their parents’ finances as easilyas they zap their energy. While it is harder to reduce the latter, you can protect your finances easily by managing them. Below-stated are five such tips that can help you in better financial planning.
- Boost Your Emergency Savings
Unexpected costs can arise anytime in your life, but these costs can feel more urgent when a baby is involved. Therefore, it is crucial that you set an emergency fund for handling such events.
Having an emergency fund that is at least three to six months of your living expenses is essential. However, you must make sure to use your emergency fund only for true crisis, and not for your every other expense.
- Read Up on Childcare Costs
The nature of work and employment has drastically changed over the past decade. Today, when both the partners are committing half of the day to their jobs, taking care of the baby becomes cumbersome. Therefore, if you and your wife are also working professionals, it is vital that you check the daycare costs as well.
- Make Sure Your Healthcare Needs Are Covered
A new-born baby, even though healthy, needs lots of care. As the immune system of a child is weak, the chances of them picking up germs and getting sick are high. To cover the costs of those inevitable doctor visits, it is essential that you purchase a health insurance policy for your child.
If you own a family floater health insurance policy, you can add your child to your existing health coverage.
- Get Term Insurance
Buying a term insurance plan is one of the most critical steps that you must take as a parent. When you are at thisstage in your life, where your family is dependent on you, purchasing a term insurance plan is a must.
In a term insurance plan, the buyer gets life cover in exchange for monthly premiums. It helps in providing a secure financial future for your loved ones, as after your demise your beneficiary can claim the sum assured as a death benefit from the insurer.
Furthermore, when buying a term insurance plan, it is vital that you check for features such as policy term, payout options, cover amount and claim settlement ratio (CSR) of the insurer.
The claim settlement ratio will help you in determining the number of insurance claims settled by the insurance company.Higher the CSR of an insurer, higher will be the chances of a fast and hassle-free claim settlement. Amongst the leading insurers today, Max Life Insurance has the highest CSR of 98.26 percent.
- Set Up an Education Fund
Every year in India, more than 11 lakh candidates fight the competitive exams to get in top colleges of the country. The cut-off percentage of many of these colleges hit 99 percent most of the times. Statistics suggest that only 2 percent of these candidates get into a college they want, the rest opt for private colleges whose fees areextremely high.
Moreover, if your child desires to pursue educationabroad, it will be even more expensive. The one-year tuition fee of studying in an ivy league college is Rs.30-35 lakh. These stats make one thing clear that no matter where your child will want to study, it will cost you money. So, start saving for their college fund as soon as possible.
Secure Your Child’s Future at the Earliest!
The above-stated tips if implemented correctly will help you in making your parenting journey smoother. Starting from the birth of your child to their first income, you must plan the finances for every major step of their life.
If you have questions likewhat is term insurance planor how can it benefit your family, you can gather more information online. Always remember it is better to prepare for things in advance than to wait for any last moment surprises.
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