First child and four ways of financial planning

Bhawani Pathania

From researching car seats and cribs to decorating a nursery, there’s a lot to do when you are expecting a baby. In addition to readying your physical house for your bundle of joy, you will also want to be sure your financial planning is in order.

There hardly is a more important time to start thinking about your finances. While it may seem overwhelming to add yet another item to your to-do list, some smart financial planning will ensure you are prepared for the changes that come with having a child. Discover four financial tasks prospective parents should prioritise before their newest family member arrives. That way you can focus on child development and quality time.

Create or review your budget

You may have been living easily on one or two incomes without a child, but having a baby brings additional expenses — not to mention potential changes to your income. For expectant parents, the first step is simply getting a clear picture of how much you earn, how much you spend and how much you save. That way you'll be able to make informed decisions about how much leave you can take, how much you can spend on child care, how much can you save for your child’s future and whether you can afford to reduce your work schedule going forward. Online budget tools can help you set up a monthly budget and track your expenses.

Purchase life insurance

It may seem odd, especially if you are still young, but now is the time to start thinking about life insurance. Should something happen to you or your partner, life insurance can prevent further financial ruin and provide for your child's immediate and future needs. How much life insurance your family needs, depends on a variety of factors, including your current income, liabilities and living costs.

Preparing for the child’s 

future education

With the rising cost of education, it is imperative that you start saving from the moment your child is born. There are many financial instruments available in the market to help you create a corpus for your child’s higher education. As basic school education is also very costly today, you should plan for a product that gives you a windfall during important milestones in your child’s education journey covering costs for additional tuition, skills training, etc. Child plans from life insurance companies offer all of this and more. In fact, insurance is the only instrument that ensures that the corpus you planned for your child is available whether you are around or not.

Most child plans come with waiver of premium which ensures that the policy continues in case of the unfortunate death of the parent and the corpus planned is available for the child. Some plans also offer a monthly income option along with a maturity payout when the child turns 18 or 21 years.

Create a will

Most people think of will as a way to distribute your assets. But even more importantly, your will designates who has guardianship of your child in the event you and your partner pass away. Creating a will doesn’t need to be complicated. You can even use an inexpensive online service or store-bought documents to name a guardian. But doing so is imperative: If you don't choose someone, the court will choose a guardian for your child — and it may not reflect your wishes.

For expectant parents, the months before the baby arrives can feel like a whirlwind of activity. But taking the time to financially prepare for your little one can provide peace of mind during this busy time, and allow you to focus on your family and child development after your baby's arrival.

The writer is Director Sales – Agency, PNB MetLife. The views expressed in this article are his own