Becoming a parent can be both exciting and terrifying. Don't worry; no one else knows what they're doing either! Of course, it’ll be a lot easier without financial worries. So here’s our six-step plan for getting your finances in shape in time for your little one’s arrival.
1. Aim for debt-free parenting
As far as incentives for clearing debt goes, having a baby is a big one. Before anything else, start paying off any debts as quickly as you can—the sooner you start, the less you’ll have to worry. And that’ll make everything else a whole lot easier.
2. List down your post-baby income
Budgeting ninjas know what they’re working with. So, account for reduced working hours, parental leave, and career changes. Plan for your post-baby income so there won't be any unexpected dips in your bank account. You need to plan for the expenses that might occur after the arrival of your baby such as vaccination, childcare, baby food, etc. Take into account the company leave policy and the maternity laws laid down by the government so that it does not affect your bottom line.
3. Buy a Term Insurance Plan
A lot of responsibilities will come with the arrival of a baby as your child’s financial future is dependent on you. A term insurance plan will help secure your family’s financial future at an affordable cost. Choose adequate Life Cover that will help safeguard against any uncertainty. With an increase in age, your premium may also increase. When you buy the term plan at an early age it is more affordable. Hence, the earning members of any family should take term insurance as early as possible.
4. Plan your baby-specific costs
From medical costs to food and nappies, get an idea of exactly what you’ll be spending on your baby. Get tips from other parents, and overestimate to avoid any surprises.
5. Create the ultimate baby budget
Now you’ve figured out the numbers, you’re ready to put your post-baby income and outgoings together and see if the books balance. If not, think about how you could spend less by cutting expenses from your Likes.
6. Start using your budget now!
Time for a trial run. Even if your due date is several months away, spending like you’re already a parent will help you get used to your budget and give you the flexibility to make adjustments before your little one arrives.