So, you've taken the plunge. You'vedecided it is time to bring a new person into your lives.
Exciting times lie ahead. There is nervousness too.
As difficult as it is to admit and while it’s not looming large, a part of the anxiety could be related to how the finances are going to work out. You can make it a little easier on yourselves by a little bit of planning – the financial kind.
#1: Take into account the impact of unpaid leaves
Sure, you have your paid maternity leave, and paternity leave is soon becoming common too.
But, many want to take this opportunity for that little extra rest, that little extra well-deserved me-time pre-delivery, and extra quality time with the new-born post-delivery.
While this is not an expense, you have to factor in the loss of income in your financial decisions, especially short-term ones.
#2: Antenatal care and hospital expenses
Doctor visits, iron and calcium tablets, maternity wear, all add up to a reasonable amount. Depending on the hospital you choose for the big day, the total bill across all 9 months could run up to INR 2 lakhs.
#3: Pay-off existing debts
At the offset, it would be a good idea to pay off as many of your existing debts as you possibly can. It might be a strain right away, but it will certainly be a relief in the next couple of years.
#4: Managing the first few months
You don't really need all the cute things in all the shops of the world. No really, you don't. A good rule would be, to buy every fifth thing you find irresistibly cute. The first four you are strong enough to resist. Yes, you can.
Like it or not, you are going to get loads of clothes, shoes, toys, and even baby toiletries as gifts. As heart-breaking as it is, you might want to hold off on your shopping till the gifts have all come in. Also, it is not a bad idea to share your need list with close friends and family who are surely going to get a more expensive gift.
Continuously, reassess your need list.
- Do you need a stroller and a pram?
- Do you need a carry cot and a bouncer?
- Can you borrow? Are you ok with hand-me-downs? Most parents whose kids have out grown their car seat or pram would be more than happy to give the clutter away.
Estimate how much you are going to spend for those first few months. You could also work this from the other end. Set-up a monthly or a total "splurge budget" for the first year that excludes “essential costs” of say diapers, vaccinations, etc. and keep yourself within that budget.
Figure out what you might need in the first 8-10 months and list it down. Cross off what you don't need or can borrow and come up with a reasonably good estimate of what you'll need to save up for the first year.
You can then add to it the cost of recurring and non-recurring essentials like follow-up doctor visits, diapers, baby food, etc.
#5: Plan for a bigger car if needed
It is amazing how a little person, all of 5 kilos, can command a disproportionate amount of space in the car with her car seat, carry cot, and what not. If you are going for a car for the new arrival, take care of that expense before she comes along.
#6: Child Care / Pre-Nursery
In today's age of mother-toddler groups, this expense starts from around when she is 10 months old. This expense might chime in a little earlier if you are going back to work earlier in the form of either day care expenses or extra domestic help at home. This could range from Rs. 3,000 per month for decent day care facilities to Rs. 8,000 for an extra maid.
#7: Plan for the unknowns
When accounting for expenses, it’s OK to go a little overboard. Worst case, you will end up spending what you budgeted for. If not, what can be better than that little bonus in the form of extra savings? Be sure to add a lump sum as per your judgment, however small it may be.
While this list might seem a little overwhelming, the expenses are indeed on the cards. The only way to get it under control is to make sure you plan for it well ahead of time.
Once you are in charge of your financial life, let the joy of a new baby take over the rest of your life.