Mother's Day 2021: Expecting a baby? Don't forget financial planning

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Bringing a life into this world is a beautiful experience. With its joys and bliss often discussed, what we tend to gloss over is the financial planning and requirements that are associated with welcoming a baby in this world. The expenses of bringing up your child starts right at birth, with hospital bills, medical expenses and more. As your kid grows, planning about their education and future also becomes integral.

Don't worry, though! While this may sound daunting, financial planning before having a kid is easy and important to undertake. A pregnancy and raising a child is heavier on the women, given that they are more affected by career sabbaticals, maternity leaves and the societal idea of unequal childcare responsibilities that are to be shared by partners. But with some pre-planning, you can easily sail through this amazing phase!

Smart investments are key

Ira Gupta, a clinical psychologist and mom-to-be, believes pre-planning is extremely important. “Setting aside some funds beforehand for key expenses like medications, hospital expenses and vaccinations is a must. Not only does it come in handy, it can save new parents from unnecessary stress and anxiety,” she says.

A 2015 study by Assocham detailed how 25 percent of first-time mothers quit their jobs to raise kids. A career break can impact household finances, which is why it's important to allocate funds accordingly. While Gupta thinks that the financial situation is better in a dual-income household, making prior investments with defined returns is something every would-be mother should consider.

In fact, a survey conducted by Citi’s Women & Co. revealed that post motherhood, money ends up becoming the second biggest area of concern, after the baby.

“Ultimately, it all comes down to smart investments. Investing in mutual funds via SIPs (Systematic Investment Plans) is a good idea, since that fund can help you tide over your time off,” she adds.

More discussions needed

Financial advisors, however, feel that financial planning around parenthood is very low. According to them, while people plan for education, marriage and even retirement, this is one area that needs to be paid more financial heed to. 

Nisreen Mamaji, CFP and CEO, MoneyWorks, highlights this glaring fact. “In my financial advisory experience, I find that women plan for all life milestones, except for this. Awareness and information around this needs to be widespread, since it is rare that women bring this topic, unless of course they avail the services of an advisor, who asks them to think on these lines. It is important for the women to plan not just for the child’s future and education, but also for her own needs during such career breaks.

Parents are often misguided about various financial avenues through which they can secure their child’s future. Mamaji recalls an instant where the parents had bought insurance for their kid as a safeguard, instead of buying a child education plan. “More and more people should come forward and proactively discuss financial planning, especially before parenthood. This should be as planned as your career moves”, she signs off.