Are you planning to conceive or adopt a child? Hold on! Raising a child is not as easy as it sounds. Apart from putting in physical efforts, you will have to make sure your finances are in place.
When you are a new parent, it is never too soon to start thinking about your finances. You have to plan for the future and be ready to meet all the planned and unexpected expenses.
Investing in a long-term fixed deposit account might be a good idea.
Let us look at some financial planning tips that can make you a pro parent.
Set up an Emergency Fund
Raising a child can involve several unexpected expenses. You will not realize unless you experience them. Children fall ill often. So, make sure you have enough liquid funds available to meet their emergency medical requirements.
What if you lose your job? You need to save at least 3 to 4 months of expenses aside. You can keep it in a separate savings bank account that you don’t access. That will let you withdraw the funds whenever there is an emergency. Moreover, you will also earn interest.
Prepare A Budget
Making a budget will help you go about your finances in an organized way.
You have to note down your income and expenditure. It will help you understand if your current income is sufficient to meet the expenses of your new member.
Moreover, you will also get to know if you need to cut down on any unnecessary expenditure.
Consider Buying Life Insurance and Disability Insurance
No one likes to think about death. But who knows the future? It is uncertain, and you need to stay prepared.
What if you pass away in an accident? Your partner will have to raise the child as a single parent. Life insurance will ensure they don’t fall into deep trouble. In addition, it will help cover the immediate and long-term expenses of your child.
Well, you should also think about purchasing disability insurance. That will protect the future of your child if you are unable to work due to some physical disability.
Add Your Child to Your Health insurance
Well, adding your child’s name to your health insurance policy will get them covered for future illnesses.
Now, don’t think that your insurance provider will automatically add your child’s name after their birth. They will provide you an option to update your plan. You can add your child to the policy within a period.
Including your child in your health policy will ensure you save a lot of money. Moreover, you will also be able to meet medical emergencies with ease.
Invest in A Fixed Deposit
A long-term fixed deposit is an excellent way to plan for your child’s future expenses. Fixed deposit interests are also higher if you opt for a plan of 5 years or more. Moreover, you will get guaranteed returns.
An FD can help meet your child’s educational expenses. You can also use it for their marriage later in life. It will give you a predetermined return. So, you can plan for the future well in advance.
Start investing in FDs when you have just conceived. That will give you enough time to save for your education.
Don’t Forget to Save For Your Retirement
Parents often direct all their savings and investments towards their child’s future. However, you should also save for your retirement.
Your income will decline drastically post retirement. How will you sustain yourself if you spend all your savings on your child? So, start planning for your retirement when your child is still young.
You may think your child will support you in future. However, that is not a practical idea. You need to be self-sufficient and take care of your own financial needs.
People often ignore financial planning at a young age. But that is the perfect time to put your finances in order. You would have the energy and capacity to work hard and earn more. That is when you should plan for your future.
Following these tips will make financial planning smooth and seamless as a first-time parent.