Financial planning for expecting parents

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Financial planning for expecting parents
It's a moment of pride and joy  when little one arrives and instantly puts the new parents head over heels with them. 

It is appropriate to create a to-do list before your baby arrives so that later on things are pretty much sorted out and you can give an uninterrupted attention to the little one. So, while deciding the baby's room colour and name, do check off some of these financial planning pointers for before and after baby birth circumstances.
Pre-baby arrival

Check Your Company's leave policy - Knowing your company's maternity leave policy helps you to decide over any additional leaves , which you might require after the birth.  Additional savings might be required  to tide over your financial expenses until you resume work.  
Emergency corpus - You should have an emergency savings cushion of up to 3-6 months of your living expenses. Pre-natal period gives you ample time to catch up with your savings.
Buy a life insurance policy - It is important to keep yourselves insured against unforeseen events.  Consider 20-year level term insurance that will last until your child is grown.
Add your baby in health insurance - Though very few insurance companies cover newborns from day one, but you can still figure out a suitable health insurance cover for your child as its always better to have them covered.
Post-baby arrival

Stick to a budget- First year of baby birth brings with it a lot many expenses like increased  health-insurance premiums, baby vaccinations and tests and therefore it is important to factor all this in your budget which will  help you to stick to it.
Revisit Financial plan - A newborn is a milestone in anybody's life and the same has to be taken into account in your existing financial plans. New addition into the family requires the addition of newer goals like your child's education and marriage, which a financial planner will help to add and execute.  Expenses and savings after childbirth have to be re-analyzed so that any change does not hinder the progress of your other goals.
Stay away from marketing tactics -  In older times, have you ever noticed how children are raised amid limited resources and negligible baby products? But, these days companies have found a way to mint money by luring new parents into buying newborn products which are completely unnecessary.
Prepare a Will - Either include your child in the existing will or create a trust for the benefit of the child which usually goes into effect only if both parents die.
Tax decisions - You can look at the option of investing in your minor child's name and if it generates an income, then it is clubbed with the parent's income. But still you can claim upto Rs. 1,500 per child as a deduction from your income.
A systematic approach towards parenthood can straighten up most of the things and lets you freely enjoy the happiest moment of your life. At the same time, apart from money matters, do not forget to squeeze out a little time away for the most needed fun vacations for yourselves.
About the Author:
Reenika is a Certified Financial Planner and has more than 6 years of experience in the financial service industry. She can be reached at

Read more about: financial planning
Story first published: Saturday, June 22, 2013, 9:59 [IST]
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