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How To Improve Your Finances Before You Start A Family

Updated on June 5, 2016

The Joy Of Having A Child And The New Financial Responsibility

Indian consumers remain most optimistic about their current and future finances with lower inflation expectations, says the Credit Suisse Emerging Consumer Scorecard 2016. The survey conducted 16000 face-to-face interviews in nine emerging countries. It is good to be certain about your current and future finances but a child can completely change your future plans. Starting a family calls for financial planning and prioritization. If you are about to be parents or thinking of starting a family then you must straighten up your finances first. In order to fulfill your child’s dreams and to provide him with the best of amenities including education, healthcare, day-care and more, you must be financially self-sufficient. You might have a lot of questions when it comes to financial planning such as how to save while paying off your debt or would term insurance offer sufficient life cover? Given below are some pointers that will help get financially equipped to start a family.

Determine Your Total income

Before you set out to make any financial plan, you must determine your total income. Your total income would include monthly salaries of the partners (if both are working), rental income, bonuses, dividends and other profits from your investments. Once you have calculated your monthly income, you can multiply it by 12 to determine your yearly income so that you can make a long-term financial plan. Also, keep your savings in mind.

Know Where Your Money Is Going

Once you have drawn up your total income, the next step is to draw up your expenses. It is important to note here that you must calculate both your current expenses as well as the expenses that you might have to incur post-delivery. This will help you determine the difference between the two and then chart out a financial plan accordingly. Also, knowing your current expenses will help you pinpoint the areas you can cut down spending.

Chart Out Your Budget

Once you have calculated your current and future expenses and total yearly income, you can now plan a budget. You must separate a certain sum of money at the beginning of the month for necessary expenses such as household expenses, transport costs, maternity care and so on. You must also cut down on impulsive spending and save on big expenses such as car and house. If you have surplus cash in hand then you must think about paying off your dues first and then investing the sum for future use. You must make an annual budget rather than a monthly one as it tends to be more accurate and you can save big, says a blog post published by Get Rich Slowly.

Start An Emergency Fund

Emergency fund should include a minimum of 3-6 months of your salary. Once you have made your budget, you can now invest your savings in liquid instruments so that you can access the money as and when you need. You must also clear your credit card dues and shut down the cards that you are not using. This will spare you the cash that you are paying as monthly dues.

Secure Your Family’s Financial Future with Term Insurance

You must life insurance policy so as to secure your family’s financial future in case of any eventuality. Term insurance offers you one of the most comprehensive cover at a low cost. It is the only pure product policy sold in India. Unlike earlier, when term plan only offered death benefits, new modified plans are in demand such as premium return back plans, says an article published in DNA in January 2016. Birla Sun Life Premium Back Term Plan is one such plan. It is traditional term insurance but with the twist that you would receive the entire premium amount upon maturity.

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