Financial planning is important for everyone, but even more so for working parents. This is because parents’ financial responsibility is much greater than people without kids. The new dual responsibilities of managing a career and raising a family can strain both time and finances. But, unfortunately, finances are where most new parents go wrong because it takes time for them to realise that the way they used to plan their finances before won’t be the same now with a new member in the family. Thankfully, we are here to help you with our financial planning, so scroll down and check out some amazing tricks and tips.
Unique Financial Challenges Faced by Working Parents
You might think you are in full control of your finances, but the minute the new tiny member comes along, it will all be chaotic. Therefore, new working parents are required to approach their finances through careful navigation. Here are some common challenges new parents might encounter-
- It is highly likely you already had a well-planned budget before having a child; however, when the child comes along, there are a whole lot of expenses that add to it, so you have to replan your entire budget from scratch.
- Most of your current living expenses also increase significantly, including transportation, healthcare, groceries, clothing, and even housing, on top of the new expenses of child care.
- With so many increased expenses from daycare and school fees to medical bills and extracurricular activities, it is easy to go over budget, and that might put a dent in your savings.
- A very unique challenge that Indian parents encounter is having to financially care for extended family. It is a common cultural practice in India for grandparents and other family members to come and help out with raising the kid as managing work and parenting can be tough. While it does ease the burden of childcare, it also increases your expenses.
Budgeting Tips and Tricks
Have Open Financial Communication With Your Partner
Financial planning should be a joint effort between you and your partner, so it is important to engage in effective communication regarding the same with them. Discuss your existing financial challenges, goals, and expectations with each other. Remember to be honest during the communication. Also, track your progress and adjust your plans together accordingly if necessary. Having open communication will ensure that you and your partner are on the same page.
Create a Comprehensive Budget
Before you start out on any planning, investments or savings, create a comprehensive budget based on your current conditions. Start out by listing your fixed sources of income as well as fixed expenses like rent, utilities, and loan repayments. Then you can list the average sum of your variable expenses like groceries, transportation, entertainment, etc. This budgeting will help you understand how much disposable income you have and where you can cut costs to accommodate the childcare expenses. You can use spreadsheets or different mobile applications to make budgeting easier.
Prioritise Emergency Savings
When you have a child, you can encounter a lot of unexpected expenses. This may include sudden medical emergencies, injuries, or repair work for items that your kid may break. This is why it’s important to maintain an emergency fund. You can maintain your emergency funds in a high-yield savings account and can easily get access to it when needed.
Review and Adjust Your Insurance Policies
Insurance policies can be a lifesaver when it comes to providing working parents with financial security. So make sure you have adequate health, life, and disability insurance. These insurances can protect your family in case of unexpected emergencies and prevent distress. Do update your insurance policies with time to ensure that they meet your family’s current needs.
Buy in Bulk
Buying in bulk always helps to reduce expenses. While you may not be able to buy everything in bulk like fresh groceries, buying other non-perishable items in large quantities can help you save more. Be on the lookout for sale in supermarkets and use any discount coupon you have to make sure you get your groceries and other necessities at the best prices available without overpaying for them. Even a little saving goes a long way.
Use public Transport or Carpool
With a new member of the family, travel expenses increase significantly. It might be difficult for you to use public transport when the little one is with you, but while travelling to work, it’s best to use public transport or carpooling as it can save a lot of fuel expense. By being cost-efficient with transportation, you’ll have more disposable income to spend on childcare or save for your child’s future. An added bonus is that taking public transport or carpooling can also help reduce environmental pollution and teach your kid good values.
Be Energy Efficient
Implement energy-saving practices at home to lower utility bills. Simple actions like using LED bulbs, unplugging devices when not in use, and optimizing your heating and cooling systems can lead to substantial savings over time.
It’s never too early to start saving for your kid’s future. Open a child’s savings account for future expenses like education so that when the time comes you don’t experience a financial strain. Any money that your child receives from other family members or relatives during festivals or special occasions can also go into their savings account. Invest in child education plans that offer financial support for higher education. Look for plans that provide flexibility in investment options and offer tax benefits. You can also begin a Systematic Investment Plan (SIP) for them to gather wealth over time. Moreover, ensure that you have obtained good term insurance plans in place so that your child’s future is not compromised even in your absence.
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