6 Financial Tips for New Parents
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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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