Having a baby? Here are some financial tips
My close friend Sapna had a baby boy a few months ago and landed here in Dubai a month ago. When she landed here from Los Angeles, I ran to the mall and bought some gifts for the baby — a towel set and a book — and went to meet her. But I’d like to give her one more thing, this new parent financial guide.
Truth be told, I thought a quick guide on financial planning would be simple to write, considering that I’ve spent quite some time writing about business and had two children, so experience is rich and firsthand. But being a financial planner, I have interviewed several clients, rich and not-so-rich, organised and not-so-organised savers and spendthrifts, including some who didn’t even believe in financial planning. And I realised that financial planning can be challenging at all stages of life.
Being a mother has such a profound impact on you, and I found it quite anxiety-inducing too. Here are some notes on how a mother manages to be financially planned. There are a few things that a new parent can do even before the baby is born. For starters, you will need to put your child on your health insurance plan within 30 days of her birth. You’ll be very tired that first month, so fill out any forms you can now. If you and your spouse have separate individual coverage, compare options to see which plan provides the best and most affordable ‘dependent’ or ‘family’ coverage.
Find out what employee benefits you or your spouse can take advantage of. Once you have taken care of this covered expense, you can have peaceful nights. God forbid if anything goes wrong with the baby’s health, you can avoid worrying about the monetary aspect and focus on the baby’s health first, without being concerned about where to find money for the treatment.
Mandatory insurance may cover you for a limited amount. My friend’s assistant at work has just delivered a premature Getting life insurance baby and the medical costs have soared to and critical illness cover Dh400,000. Insurance covered is a process that only a basic Dh150,000 involves finding a right only but the rest of the money insurance consultant is outstanding. The assistant is constantly worrying about how to arrange money rather than taking good care of the baby. All savings are exhausted and the future looks dim till some charity comes to rescue.
Meanwhile, while you’re up one night with insomnia — or a screaming infant — spend some time thinking about how you could die prematurely. Make sure your child will be financially covered if that happens.
Getting life insurance and critical illness cover is a process that only involves finding a right insurance consultant and giving blood at the clinic for health tests. ‘Buy young’ is the only advice that will work for everyone.
Write a will that names a guardian who, if disaster strikes, would be there to step in to be your child’s parent, help her with homework and keep her safe. If you don’t have this decision legally inscribed on paper, you’re leaving it to a judge, and life could get ugly if several people show up for the money they thought you owned. Have a copy of this will with your lawyer or somewhere handy to find in your home so that everyone knows who will be caring for your child if something were to happen.
I know that new parents aren’t known for their flush finances, but I’d rather be safe than sorry. Next up is education costs. They are soaring year on year. Just as how you get enrol your child in primary school and pay fees, don’t forget to start saving for higher education. Today, children are becoming smarter and it is no more a surprise if your child gets admission to Harvard. Mind you, Harvard, as on date, charges $65,000 to $70,000 average for most of its popular courses. How do you manage to save $300,000 per child for education? ‘Save young’ so that you pay less per month. To save $300,000 (using an investment tool of seven per cent return growth rate in 18 years), you will need $1,000 per month of saving.
So, in conclusion, there are four areas that a woman must financially plan herself for, before or during motherhood: Medical insurance, life cover, critical illness cover (buy young) and child education (save young).