Embarking on the journey of motherhood? Don’t forget to plan your finances

Financial planning tips for baby: Expected and unexpected needs crop up prior to, during and after becoming a mother for which one needs to be prepared. Let us evaluate some reasons that highlight the importance of financial planning before one embarks on the beautiful journey to being a mother.

By Priti Rathi Gupta

Becoming a mother is one of the most joyous experiences in a woman’s life. A joy that should not be clouded by financial worries. A survey conducted by Citi’s Women and Co revealed that after becoming a mother, money ends up being a woman’s second highest priority after the baby. Managing finances effectively is an integral part of being a mother. Expected and unexpected needs crop up prior to, during and after becoming a mother for which one needs to be prepared. Let us evaluate some reasons that highlight the importance of financial planning before one embarks on the beautiful journey to being a mother.

Financial planning before family planning

Earlier, when one had the support of grandparents or joint families, several things could be taken for granted. The pregnant mother and later both the baby and mother could expect to receive continuous care from other members of the family. Family members could also be relied upon to pitch in if there was any financial emergency.

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Over the last few years, there has been a growth in nuclear families. Young couples are also keen on not burdening their senior parents. Therefore, it would be prudent to begin saving up for motherhood right after marriage. Depending on their income and savings, the couple could plan when to try having a baby. If they are not financially comfortable, parenthood could be deferred by a few years. There are various factors such as doctor’s expenses, hospitalisation, loss of income, baby related expenses, etc, which one would have to plan for.

Pregnancy-related expenses

If you believe your expenses would increase only after your little baby comes along, you could not be more mistaken. Even before conception, you may have to spend on doctor’s expenses for check-ups and tests if they are needed. Setting up your baby’s room or making the house baby-proof would also invite costs. You may also have to buy suitable clothes and toys for your baby before giving birth as these items would be conveniently available once the baby is bought home. Hospitalisation related expenses would have to be managed.

Incidentally, several insurers offer maternity insurance policies. These would cover pre and post-delivery hospitalisation expenses, normal and C-section deliveries, expenses related to medical treatment of the newborn, vaccination expenses for the newborn, etc. Investing in a comprehensive maternity policy would certainly make sense.

However, one has to bear in mind that congenital diseases, pre-existing diseases affecting pregnancy, treatment expenses related to infertility, etc, wouldn’t be covered. Before purchasing a policy, one must scrutinise all inclusions and exclusions thoroughly.

Expenses will increase post-pregnancy

As per existing prices, without taking inflation into account, it takes Rs 67.4 lakhs to raise a child from conception to college. Approximately Rs 6.2 lakh is spent on a child from the time they are born till the time they turns four. Note that this is just an indicative figure and numbers could differ for families across varied economic backgrounds. The bulk of it is due to health-related expenses. Other expense heads could be toys, clothes, etc.

What must you do?

According to Assocham, almost 25 per cent of first-time mothers quit their jobs to raise children. Many of these mothers don’t wish to come back to the workforce after a few years of motherhood because they are apprehensive that they might be discriminated against. Some mothers are open about rejoining the workforce once their children begin attending college. Loss of income for women due to motherhood is a serious issue and cannot be brushed under the carpet.

Hence women and their partners must prepare for a time when they may have to depend on only a single source of income. A married or a live-in couple may be able to manage this.

However, what about single mothers who are unable to work after motherhood? They may have to either depend on a combination of passive income offered by deposits and parents, part-time jobs and assistance from friends.

Therefore women must set aside some part of their savings every month towards investing through SIPs for building a corpus. Once they find a suitable partner, the partner could also contribute to this fund. If a 22-year-old woman starts investing Rs 4,000 per month, by the time she is 30, the corpus would be worth Rs 7.4 lakhs at a CAGR of 15 per cent. Similarly, one could also begin investing for one’s baby’s milestones such as higher education or marriage.

The journey of parenthood is one that is immensely demanding yet very fulfilling. Making and consistently reviewing it for new milestones can make the journey exceptionally rewarding.

(The writer is founder, LXME and MD, Anand Rathi Group.)

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