How should expectant parents save?

Ranjit Punja CreditMantriSince expectant parents are on the receiving end of advice from friend, family and well-wishers for nine months and more, here is some more advice to add to the mix.A new baby invariably means a huge immediate increase in expenses – medical expenses, food, baby furniture (like a cradle/cot, pram, high chair), clothes and toiletries including diapers.  To make matters more problematic, your income remains the same, or in many cases decreases with extended maternity leave or with some parents dropping out of the workforce altogether.It is difficult, but at the same time necessary, to find ways to save money to welcome the new addition without damaging your finances in the long run. Here are some simple tips on how you can save money, at least in the short run:Before anything else, make a budget. Take the time to list your income and your expenses under various categories. You will be surprised to see how much you spend and on what. Use this table to identify areas where you can cut down expenditure on a regular basis – instead of four movies a month, you could reduce it to three or two, the resultant savings can be significant. Factor in the money spent on popcorn, movie snacks, ticket price and the savings over nine months (or more) can be gratifying.Similarly if you find your cell phone bill abnormally high, you can take conscious steps to reduce usage or force yourself to save by getting a less expensive plan. If your mobile is only for personal purposes, you can easily cut down usage if you are disciplined about it. Revisit your original budget once the baby is born to factor in the new expenses and any change in your income inflow. Do not fritter away any cash gifts on everyday expenses like diapers. Open an account in the baby’s name and deposit all money presents in the account. You will build a healthy balance if you leave the money untouched. If you have received a substantial amount from grandparents, you can consider investing it in a safe instrument (like an FD) or if you feel more adventurous, in mutual funds.Think of alternate sources of income while you still have the time and energy! You could clear your closets and storage of all unwanted possessions and sell these online - there are several online sites where you can sell your stuff. Or you could consider renting out a room (if you have a 2 bedroom) either on a monthly or a nightly basis during those nine months. Again, there are a plethora of accommodation websites where you can list your room. You can make a substantial amount renting out your room if you are willing to take on the temporary lack of privacy or inconvenience.These tips might help you save for the immediate expenses once the baby is born and for a little while after that. You also need to plan for the longer term financial requirements of your new, larger family – for instance, health insurance, life insurance, education fund. For each of these, it is advisable to set aside money early - small amounts invested periodically will lead to a much bigger corpus for your child, than a larger amount invested much later. Having a child is never easy, and financial sacrifice is part of the parent package. Planning now can make that sacrifice less painful in the years to come.