5 Ways to Prepare Your Finances for the Second Child

‘Family is where life begins and love never ends.’

Amit and Sneha, two successful professionals were over the moon when Sneha was pregnant with their second child that they had been wanting for a while. With double income, they led a comfortable life, sent their elder child to nursery, lived in an upscale locality in Hyderabad, splurged on vacations and weekend getaways! But now with another life was on its way there was additional financial planning that needed to be done. But how?

Having a beautiful family is undoubtedly one of life’s biggest blessings which comes with its own responsibilities. If you are on your way to becoming parents again, take these simple steps:

Create a New Budget

Take stock of your current budget and then make provisions for increased expenses after the baby arrives. Remember to include recurring monthly costs on account of diapers, formula foods and supplements, hiring help or a nanny, day care, etc. Also factor in costs associated with childbirth like hospitalization, periodic checkups, vaccinations, etc. If you are planning to move into a larger house, then keep in mind the additional rent that you shall be shelling out each month. You may also have to spend to get some new furniture or revamp the existing one for the new member — all expenses that must be accounted for.

Save More and Spend Wisely

Since you will now have two children whose future you will be accountable for hence your saving has to be upped. Tricky since your expenses are also going up. Hence try these nifty tricks to reduce your expenses. For all your buys look for special deals, coupons and redemption of points, so that get more for less. You also need to keep a check on impulse buying, dining out and holiday travel.

SIP is an excellent way to invest and save regularly. You will be surprised at the large corpus you can build a few years down the line.

Revamp your Investment Portfolio

Your investments now has to incorporate new goals of your second child’s future needs like education, health care, creation of assets, etc. This is why you need to try new investments or add-on to the existing ones to secure the future of your family. Many young couples start financial planning for their retirement early in life. If you are one of them, make sure that this remains unchanged. Also the arrival of your younger child should in no way impact the future your elder child that you might have secured through savings and investments.

Take Advantage of Employer Benefits

Find out about and take full advantage of maternity benefits, insurance, medical allowances, etc. provided by your employer. Most organizations provide aid on health and medical grounds in different manners like reimbursements on hospitalization, health insurance for employee and dependants, maternity and paternity allowances, leaves, etc. Learn about all these benefits your employer offers.

Avoid increasing Credit Card Debt

There are some unavoidable and obvious expenses associated with the arrival of a second child. Remember to keep your credit card expenditure in control when you are planning to have a larger family. Spiraling monthly installments and interest on your credit card can send your budget into frenzy and land you in deep debt. Also ensure that you do not miss your payments every month even if it is only the minimum amount that you can spare in a particular month. Ideally, restricting your credit card usage to 30% of the available credit is also another healthy financial practice at every stage in life.

We are bestowed with countless blessings and children are certainly one of them! Planning for them financially makes you better prepared to experience parenthood in all its glory for the second time.

Gautami Sen is an MBA having majored in finance. However, she now fuels the creativity in her through various passionate pursuits like writing, painting and honing her culinary skills.