6 FINANCIAL TIPS FOR NEW PARENTS

Dear Reader,

If you are reading this article, we are assuming that you are all set to welcome your bundle of joy (or probably have). 

Heartiest congratulations. The happiness of becoming a parent is unmatched. The feeling of holding your own baby that you gave life to, the sense of seeing yourself in another form, makes parenthood one of the best feelings. 

But with all this comes one thing – ‘Responsibility’.

We understand that there would be a whole lot of things on your plate: Informing your family, picking a name, setting up doctor appointments. 

But as always, we are here to help you tick off some financial tasks you would need to resolve sooner rather than later. 

1) Increase your Life cover

A newborn comes with added responsibilities and God forbid you are not around to fulfill them, you surely do not want to leave your child languishing. 

As a parent, you would want to provide for your child the absolute best, even in your absence. Review your life cover and make sure it covers all expenses, whether it is education, food, and obviously a bit of leeway to enjoy. 

But hey, do you even have life insurance? If not, consider getting yourself insured. It is righty said Bura waqt bata ke nahi aata. As a thumb rule, you should have life insurance that is about 10 times your annual salary.

2) Open a saving bank account for your newborn

For months and years down the line, you will be having a lot of money coming in the form of gifts for your kid. 

Most families would ignore this owing to the small ticket size and spend it in a blink of an eye 

Solution? 

Open a bank account for your newborn and deposit all money coming in as gifts. This should be made a rule, so you don’t spend that amount unnecessarily. Once this figure is sizeable you could even convert it to a fixed deposit or a PPF.

More so once your kid reaches a more mature age of letting us say 10, you could allow them to handle their own account. What harm in gaining some financial literacy, eh?

Did you know?

You can apply for a PAN card for your kid even before they turn 18 years of age. In fact, the Income Tax department allows parents or guardians to apply for a new PAN card for a minor. 

3) Get your baby added to the health cover

Assuming you already have health insurance (bought by yourself or through your employer), make sure you are adding your newborn to the policy. 

Now, most insurance companies would not risk insuring until the baby completes 90 days. Some of them may add the child to the parent’s policy to cover any early vaccinations or postnatal care.

When you add your newborn to the policy, your insurer may recalculate the premiums leading to you paying a higher amount.

Most importantly, know what is and what is not covered.

If you would wish to gain assistance, you can get in touch with us.

Note that it does not matter if the child is biological or adopted, the process is the same for all.

4) Start a debt fund for school expenses

Fees for private schools have been spiraling over the past decade. 

Quality education costs a lot more than it used to and if you take inflation into consideration the figure looks terrifying.

As a parent, your child’s education is not something you would want to compromise on. It is important that you plan way ahead of time instead of waiting.

If these expenses arrive in the next say 3 or 4 years, you could start a SIP in a debt fund. Debt funds are a great tool to achieve your medium-term goals.

A Recurring deposit could also serve a good purpose here.

If you want to plan investments for your child’s education, you can book an appointment with us to know more. We would be happy to help.   

5) Avoid any ‘child plans’ (A big NO to them)

Don’t be surprised if your neighborhood or a far-off relative who is an insurance agent pays you a visit soon. They would probably tell you how hard it is to meet expenses these days and talk you into buying a Child plan.

As a parent, you always want to provide the best for your child, and these so-called ‘Child plans’ are built and marketed in a way to trigger those emotions.

These plans usually cost high and come with a payout on a regular basis.

Just remember, the best investment for your child is not to invest in any scheme which has 'child' mentioned in it.

6) Don’t forget to get done with the basics

Apart from the above points, the most obvious ones would include applying for a birth certificate (most hospitals would take care of this). You can also apply for an Aadhar card for your newborn which is known as ‘Baal Aadhar.

In case you are a frequent international traveler and need your family around, applying for a passport becomes mandatory as well.

As far as nominations are concerned you might want to add your newborn as a nominee to some of the assets you own. The same goes with your will, if you have one you might want to update it as soon as your baby is born.

Also, avoid over-spending on a lot of clothes and toys. You see, kids grow quickly. You do not want to be committing a huge amount of money to expensive clothes. If possible, you could even consider borrowing them from either your older siblings or friends who have already turned parents.

Finally, on this beautiful journey of parenthood, nothing should stop you from creating some beautiful long-lasting memories.

Until Next time.

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