4 Financial Things to do When a New Life is Added to Your Family

The birth of a child in a family is a much-awaited and celebrated moment. To hold a tiny human being in your arms exudes a feeling that melts your heart. It is natural that as a parent, you want to provide a comfortable and secure life for your children.

A lot of things in your life change when a new member enters your family in the form of a small baby. In any kind of planning for the child's future, it is strongly recommended to include money as well to make sure that once the child grows up, he/she gets the best things in life. Let's discuss how to plan for a financially secure future for your kid from the moment they come in your lives.

1. Revisit your life insurance portfolio

As a parent, your responsibilities increase manifold with the arrival of your little bundle of joy. If anything were to happen to you, your life insurance cover should be sufficient to cover the expenses of your child such as school fees, living expenditure, higher education costs etc. till he/she becomes financially independent.

If you already have a life insurance policy, the birth of your child is agoodtime to revisit your policy. If you haven't opted for life insurance till now, opt for one immediately. As a person with dependents, you should go with term insurance that offers comprehensive coverage for a small premium. It is the simplest form of life insurance and an affordable one. If you're a 30-year old man, you can get Rs 1 crore coverage on an annual premium of Rs 6,608 (tenure 30 years), which is less than Rs 600 a month.

2. Include your kid in your health insurance cover

Your family has expanded and so should the cover of your health insurance. Make sure to amend your policy and include your child as well. Though it is strongly advised to go with individual health insurance; you can get your child covered under an employer-provided health insurance policy as well.

Take all adequate steps that are required to provide health insurance to your child immediately. Many health insurance companies cover new-born as well if they have covered maternity expenses.

3. Start planning for your child's future expenditure

Though, you might be thinking that why should you plan for education expenses when your child is merely a few days old. However, trends in education costs are alarming. Consider the following example:

As a parent, it is your responsibility to start preparing for your child's education expenses the moment they come in your life. The early you start, the more corpus you will be able to create due to the power of compounding.

Consider this, if you start investing Rs 10,000 from the age of 30, you would have nearly Rs 47 lakh after 16 years, if we assume the rate of return as 10%.

The most important feature of best child plans is that they safeguard your kid's future even in your absence. In case something unfortunate happens to you, the insurer will waive the future premiums and continue offering coverage to your child. Moreover, best child plans let you make a partial withdrawal as per your needs. Some of these plans offer money back options too.

Child plans let you invest based on your child's education needs, your current financial status along with your other monetary goals. Moreover, both the premium paid and benefits received are tax-free.

Before the high education expenses, you would have to deal with crèche expenses, school fees, coaching expenses and other miscellaneous costs. As these expenses will arrive in next few years, you can open a recurring deposit in your bank or start a SIP in debt fund to meet these short-term expenses.

4. Update your nomination in various financial products

It is the time to update all your insurance and investment products and include your kid as a nominee. Also, if you have written a will, make sure to update it after the birth of your child. If you forget to do so, your baby might not get his/her share in your wealth in case of worst scenarios.

It is evident from the points mentioned above that the birth of your child brings with it a lot of responsibilities. Therefore, it is vital that as a parent, you secure the future of your child and ensure that your kid doesn't miss out on essential things in life, even in your absence.