Prepping up to welcome a new member into your family? Congratulations!
We understand that expecting mums and dads are used to getting a lot of advice from people around – right from what the mother needs to eat during her pregnancy to which hospital would provide the best facilities at the time of delivery. While all of these are important, soon-to-be parents have a number of money-related tasks and decisions they need to make before the baby arrives. In this article, we have compiled the top financial steps expecting parents need to make before welcoming the new bundle of joy home.
Create a Pre-baby Budget
It is always a good idea to start preparing in advance. Make a pre-baby budget that outlines the expenses – medical check-ups, hospitalization, and so on. You may have to forgo certain luxuries to stock adequate liquidity for the pregnancy period (pre- and post-). Revisit your budget regularly and re-allocate funds to different categories as your child's needs change.
Make Sure You Have Health Insurance
Medical costs are quickly rising and that's why having health insurance cover is essential. It will provide the cushion to cover these expenses. Look for policies that will cover the newborn as well. If you already have a family floater plan that covers you and your spouse, make sure to include your child in it. Generally, once the baby is 3 months old, s/he becomes eligible for health insurance.
Start an Emergency Fund
If you haven't already started, now is the time to start an emergency fund. The general rule of thumb is to have at least six to eight months of living expenses. If you or your partner is laid off from work (or you face some other kind of emergency), your family's finances will be taken care of for several months through the emergency fund. Take into account recurring expenses such as house rent, bills, transportation, groceries, and so on.
Get a Life Insurance Plan
When you are separated from your little one for the first time—which may be for a few minutes, hours, or days—you begin to ponder about what would happen if you were no longer around to look after him or her. To financially protect your spouse and child should the unexpected occur, it is necessary to have a life insurance cover in place. Young parents on a budget can look into affordable term insurance policies that offer a set death benefit amount to cover the family’s financial needs.
Having a child is an incredible responsibility and a bit of planning will go a long way. Following these points will hopefully give you a head start on preparing your finances now so that things will be easier later.
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