Starting a family is a wonderful time, everyone is happy, excited, and a little nervous but it can also be a stressful one. If you are a parent, parents-to-be, or planning a family in the future – one of the most important things to consider is how much it is going to cost. You cannot put a price tag on having a child; it is a priceless experience that adds immense joy and meaning to life. However, smart parents are those who are prepared for the journey emotionally, physically, and most importantly, financially.
One of the most important things you can do to reduce stress is to establish sound financial habits early on. Here are ten financial tips to keep in mind when starting a family:
1. Create a budget
A budget is the foundation of good financial management. It helps you understand your income, expenses, and how much money you can allocate toward different categories. Create a budget including your income sources, expenses, and savings goals.
a. Save for emergencies
Having an emergency fund can provide peace of mind and financial security. Aim to save at least six months of living expenses in an emergency fund.
b. Consider childcare expenses
Child care can be a significant expense for families. A study by Aditya Birla Capital suggested that the cost of nine months of parental care and delivery might go up to Rs. 2,00,000/- and the two-year cost of raising an infant (0 to 2 years) can go up to Rs. 5,00,000/-. Consider the cost of child care when creating your budget, and start planning for it as early as possible to enjoy the best time of your life.
c. Don't overspend on baby items
Babies need a lot of stuff, but you don't have to spend a fortune on it. Consider buying gently used items or borrowing from friends and family to save money.
d. Plan for education expenses
Planning for your child's education expenses early can help you avoid financial stress later on. There is no need to explain how expensive the education system is. According to a survey by NDTV, in most schools in Tier-I and Tier-II cities, the annual tuition fee might range from ₹ 60,000 to ₹ 1.5 lakhs.
2. Get a life insurance
Life insurance is important if you have dependents who rely on your income. It can provide financial support for your family in case something unexpected happens. If you already have insurance then review your insurance coverage regularly to ensure that it meets your family's needs. Consider getting a term life insurance policy if you don't already have one.
3. Plan for retirement
It's never too early to start saving for retirement. There are numerous government schemes as well as private plans to help you accumulate your retirement fund. Consider setting up a retirement investment as early as possible and contribute regularly to it.
4. Make a will
Creating a will is an important step in protecting your family's financial future. It ensures that your assets are distributed according to your wishes and can help avoid legal complications.
5. Communicate with your partner
Effective communication with your partner is essential for good financial management. Set financial goals together, create a budget, and regularly review your finances to ensure you're on track.
Starting a family is an exciting and challenging time, but by following these financial tips, you can establish good habits that will help you achieve your financial goals and provide security for your family's future. This will help you enjoy the happy moments in your life stress-free. So, stay aware and start investing, until next time!
