The birth of a child is one of the best moments in a person’s couple’s life. However, it comes with added expenses and if this coincides with a job loss, it can be stressful.
Plan Expenses For The Next Six Months
In situations like these, which can be highly stressful, the first and foremost is to ensure expenses for the next six months. Ideally bare minimum but also realistic. If you have an emergency fund, it would come in handy now.
“Then one needs to assess investments and apply to jobs even if they are part-time, ensure there is some money flowing in too, this gives a sense of relief and motivation for the day to day struggle,” Shweta Jain, founder of Investography, a financial planning firm.
Cut Down On Discretionary Expenses: This is obvious, but one needs to drastically cut down on discretionary spending. This is the only area that is under one’s control as most other expenses and expenses related to the baby cannot be cut down. One may also be prudent when it comes to baby-related expenses.
“Choosing high-cost items or items which can be used for a short time only for the baby can be a temptation. Choose items that you're buying with care. Hand me downs or ensuring that the gifts family and friends give match their requirements by sharing them is a good idea to limit expenses,” says Jain.
Avoid Credit Card Loans: In such a situation, avoid credit card expenses and credit card loans as much as possible. “The mistake to avoid is - not to spend for regular household and pregnancy-related expenses through credit cards. Also, do not take any credit card loan,” says Suhas Harshe, financial planner, MoniYogi Suhas Harshe, a financial planning firm. Credit card spending can land you in debt if you do not pay on time so it is best avoided.
Look At Loan: While a credit card loan is a bad idea, other low-cost loan options can be explored. “Few other short-term financial support options can be taking a small loan against an insurance policy or debt mutual funds, or bank fixed deposits (FDs) or taking a temporary overdraft facility from their bank,” says Harshe. Such loans come at a lower rate of interest than credit card loans or personal loans and can help one tide over a tight situation.
Pause Your Investments: “If the burden is too much to carry, then they can think of pausing their savings or investments by stopping/pausing the Recurring or Mutual Fund SIPs for some time,” says Harshe. Also, if there are Also, are any income-generating investments whose income is being redirected to any further investments in auto mode, such income can be used to bridge the gap.
