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Are You Financially Ready For A Child?

Posted: June 28, 2011

Is it important to be financially prepared for becoming a parent? How do you know if the time is right?

Poornima Kavlekar

How important is it to be financially prepared before you have a baby? When I asked this question to my friend, who had her first baby 10 years back, she said that these are emotional decisions and not linked to finances. When they decided to have a baby, they didn’t think much about how prepared they were monetarily. Most of us in India think along these lines. So did I, to a certain extent. While I always knew that I would be giving up my job when I had my baby, sacrificing a full- time career as a journalist and, therefore, moving from a double to a single income, wasn’t an easy process. My husband and I took a few important steps in preparation for parenthood though, which I will discuss a little later.

But, just before I sat to write this story, I chatted with a set of working women in their late 20s and early 30s, married for a few years now and fitting the profile of “time-to-have-a-baby -soon” category, to understand their take on this. And I got a different perspective. Most of them felt that they were financially ill-prepared and were unsure about their ability to support a child and other related expenses. In other words, today’s women are financially more aware, but as a consequence caught in a dilemma. “I am not sure if a single income will suffice under the circumstances as I will have to give up my job for at least a while,” was a common response.



Most of you will agree that we can never be fully sure of our readiness to become parents. Be it financially or emotionally, parenthood remains uncharted territory! It’s a journey filled with unexpected events. But, from a money management perspective, when a working woman gives up Rs. X amount of income for Y period of time, (something many Indian women do), some degree of preparedness is possible and prudent.

Is it possible to gauge how much you will need on a monthly basis and what should be your joint monthly inflow and outflow to help you decide the right time to have a baby? Not really, most of my respondents felt. However, one thing that all of us concurred on is that having a broad level of financial stability before you have a baby is essential. My friend, Aparna also gave an example, “If you see yourself starting a new business, or perhaps are signing up for an EMI, it’s important to evaluate how the decision to have a baby will impact the inflows or savings.”

Remember you can raise a child on whatever income you have, be it higher or lower from the current level, as long as you know, prepare for and prioritise your expenses.

However, you cannot compromise on the non-negotiable expenses like medical emergencies. To deal with this, take adequate insurance cover, life and health mainly, for everyone in your family, including your parents. Start saving for your child’s education as early as possible. You could ease off a bit on discretionary expenses initially to help you get that balance of an additional member in your family.

As a policy, start saving as soon as you begin your career so that you have already created a base to fall back on, during periods of lower income. The career break you take for motherhood may last a few months or even stretch over a couple of years. To avoid financial crunch in such a situation, put away a nest egg of around 8 to 10 months expenses. This is what I did. When I knew I was going to give up my job, I saved 6 months’ salary and set it aside exclusively as an emergency fund. Seven months after my first baby was born, I was ready to take up part time assignments which helped me regain my financial security.

For today’s couples who are getting ready to face parenthood, emotional and financial preparedness go hand-in-hand. So, go ahead and welcome your baby with open arms….and financial security!

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2 Comments


  1. Like you, I was also sure of taking a break to have a child and being around the child. I waited for 8 years (yes, quite a luxury) to reach a certain level of financial security–I’d bought a flat by then so mentally felt at peace at saving rent being paid earlier.
    With a child, expenses go beyond any plans one has made so other than downsizing one’s lifestyle–like you did–it helps to stash away some money for any medical emergencies–after all, babies do fall sick a lot in the first 2 years.
    Then, another consideration is whether to have just one or go for another. A woman needn’t give in to familial pressure to have more than 1 child if she isn’t physically, emotionally and financially ready. The general view that the 2nd child also gets reared along the way is impractical. Children are individuals and require attention tailored to their personalities as they grow bigger.

  2. Hey Poornima,
    You are very right in saying that a couple (especially woman)should be financially equipped before deciding to have a child. Me too going thru the same thought process, but really not sure how much should I be prepared & after having the baby, whne will I be able to got back to work. But yes, as Kalpana said, I should start putting aside few month’s salary for my Baby.. 🙂 Nice discussion

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