Welcoming a newborn? Don’t forget to make these 5 financial decisions

Welcoming a newborn into your family is an important milestone in life. From the excitement of holding your baby for the first time to the nervousness of the increased responsibility, parenting is quite the adventure.

As you start this new chapter, wisely planning your finances is crucial to give your child the best life possible. With a few strategic financial decisions, you can secure your finances against the unpredictability of life and give your child a safety net.

So, if you are expecting a little one soon, here are five financial decisions you should make immediately.

1. Reevaluate your emergency funds

From one-time purchases, such as clothes, bottles, etc., to regular expenses like diapers, wipes, and more – having a baby means increased financial responsibility. As your child grows, these expenses continue to rise to cover their education, entertainment, etc.

This is why reevaluating and growing your emergency funds becomes essential when planning for a baby. Account for the essential monthly expenses your new family incurs and aim to set aside enough money to cover these for 3-6 months.

2. Update your health and life insurance plans

Medical emergencies don’t give a warning before knocking on your door. Hence, an updated health insurance plan is essential to secure your finances. Similarly, a life insurance plan ensures your child’s future is unaffected if something happens to you or your partner.

Reviewing your health insurance policy is an important financial decision to check if it covers maternity care and newborn health services. Moreover, you should consider increasing your life insurance plan’s coverage due to the additional financial responsibilities of becoming a parent.

3. Start creating an education fund

Planning for the future sounds far off when your newborn is so young. But before you know it, daycare costs, school and college fees, expenditure on academic supplies, and more expenses will start catching up. As education costs rise in India, preparing an education fund is an important financial decision that must be taken early.

The fees of schools and colleges are always on the rise – in fact, a child’s private schooling from ages 3 to 17 can cost as much as ₹30 lakhs! This is why making the right investment decision in your financial management plan can go a long way in securing your child’s future.

4. Create or update your will

As a new parent, your child’s secured future becomes a priority, which is why long-term financial management is so important. If something unfortunate happens to you, ensuring that your child and your family are protected can bring great peace of mind.

Laying down a simple yet clear estate plan is an important financial decision that can cut back on any confusion or legal hurdles. When creating or updating your will, don’t forget to specify who will be your child’s legal guardian and handle their finances until they are old enough.

5. Learn the basics of financial management

While we have covered the basics of the most important financial decisions you must make as a new parent, raising a child holds several surprises. There’s no doubt that the joyous moments are endless, but you can also expect some challenges along the way.

This is why understanding the basics of financial management is so important. Every family’s financial goals and needs are different. By educating yourself appropriately, you can ensure that your child and loved ones are always adequately protected.

IDFC FIRST Academy: Your key to unlocking better financial decisions
 

As welcoming your little one increases your responsibilities, effective financial management becomes crucial for young families. The right financial decisions can go a long way in securing your child’s future by protecting your finances.

As a new parent, resources like IDFC FIRST Academy can be very helpful in improving your financial literacy. Browse various courses, from the foundation level for absolute beginners to intermediate and advanced courses for the seasoned.

With IDFC FIRST Academy, you get access to –

1. Easy lessons that simplify complex financial concepts for a better understanding
2. Flexible formats, from blog posts to video content, to suit your learning style
3. Active learning through interactive quizzes and activities based on real-life scenarios
4. A digital learning platform for you and your family to improve your financial literacy together
5. Certification upon completion of an IDFC FIRST Academy course

Secure your child’s future with savvy financial decisions today
 

Parenthood is a beautiful journey – full of joyous moments yet increased responsibilities. As you welcome your little one into this world, making smart financial decisions becomes even more important.

Secure your child's future by taking your first steps towards better financial management. And whenever you need guidance, IDFC FIRST Academy is here to help you secure your finances today!