Mother’s Day 2024: How should expectant mothers plan for emergency funds

It is undoubtedly exciting to welcome your little one, but it is also the perfect moment to take a step back and assess your financial situation.

As one embarks on the journey of motherhood, there's an array of emotions and responsibilities that comes one’s way. Amidst the joy and happiness, one crucial aspect that often gets ignored is financial planning, especially when it comes to emergency funds. An emergency corpus either needs to be created or should be increased with this new happy addition to the family.

It is undoubtedly exciting to welcome your little one, but it is also the perfect moment to take a step back and assess your financial situation. It is crucial to prioritise building an emergency fund. This fund acts as a safety net during unforeseen circumstances, providing peace of mind and financial stability.

Here's how a new mother can ensure financial security for herself and her family.

How much is enough?

Aim to save at least three to six months’ worth of living expenses for your emergency fund. This should be a cushion to cover essential costs such as  loan EMIs, rent, utilities, groceries, and childcare expenses in case of unexpected events that could be due to employment or a medical emergency.

It is important to plan out creating an emergency fund much in advance. This means that if you plan to start your family, it is just the opportune time to also start planning for expenses and financial responsibilities that would come along.

Small savings to begin with

As a new parent, it is understandable if one feels overwhelmed by the thought of financial responsibilities that would accompany it. Begin by setting achievable goals. Allocate a portion of your monthly income towards your emergency fund. Consistency and discipline is key here. Small contributions if invested in the right instruments can have a significant impact on your corpus creation

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Relook at your budgeting

Take a close look at your monthly expenses and identify areas where you can cut back on some discretionary spending. Channel the savings from these cuts into your emergency fund. Remember, that every rupee saved is rupee earned.

Automate Your Savings

Automated savings are an effortless way of saving. Set up an SIP account into a fund that best suits your requirements. Also, ensure that your Savings to Surplus ratio is above 75 percent which means that you invest a significant percentage of your monthly surplus towards your financial goals. By automating your investments, you are less likely to spend the money impulsively and have better control of your finances.

Plan for long-term goals

Once you have planned for your emergency fund, it is about time to plan for other long-term goals as well. This could include your child’s education planning or your retirement planning. The financial planning exercise should not limit you to planning for your short-term goals only but should employ a more holistic approach and be very specific to your financial needs and aspirations.

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Review your emergency corpus

Also, keep reviewing the size of your emergency fund from time to time. This is relevant considering that inflation on short-term expenses, especially in the case of medical costs could be very high. Hence, reassess and adjust your emergency fund periodically. Whether it's increasing your savings target or reallocating additional funds to your emergency corpus, an annual review will provide clarity for the same.

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Start early

Remember that starting early has significant advantages. It has been demonstrated time and again that the delayed cost of investing can have a significant effect on your corpus. For an emergency goal, a one year delay in investing can create a substantial difference in the final amount you accumulate.

In conclusion, as you embrace the joys and challenges of motherhood, don't overlook the importance of being financially aware of the responsibilities that will come along. By prioritising the building of an emergency fund you can navigate parenthood with confidence and peace of mind. Remember, the journey to financial security is a marathon, not a sprint. Start small, stay consistent, and celebrate every milestone along the way.