Embrace motherhood with Joy: Don't let financial worries get in the way

The first thing that any mother thinks about when she hears about her pregnancy is to provide the best for her baby. This comes with a list of things that involves cutting down on certain lifestyle expenses to balance out the financial status of the family. Costs to be borne during pre and post-delivery are often rushed out of immediate cash flows, putting other payments in a chaotic state.Additionally, it is crucial to consider that once a baby enters the picture, it’s not just the immediate costs but future financial needs like higher education, etc. also need to be planned for.
So, this Mother’s Day let’s take a goal based approach towards securing a bright future for your little one.
Once the child is born there are innumerable expenses like clothes for ever-growing children, diapers, toys, baby products, and food. These recurring costs may not look big taken alone, but over a period they will significantly impact your family’s budget. Apart from immediate pre -natal and post-natal expenses you also have to account for the major milestones – graduation, post-graduation, marriage, etc. All of these require a lot of money and you will greatly benefit if you start investing for these milestones well in advance. If you start investing a small amount from the time your child is born, you will have considerable time to build a good corpus for your child’s education and marriage.
Divide your goals into short term, mid-term and long term. The short-term goals are those which can be achieved in a year, examples could be your children’s school fees or payments for extracurricular activities. For such goals, it is advisable to keep your money in a Liquid, Arbitrage Fund. Medium-term goals to be completed in 3-5 years, can be invested in debt and Balanced Mutual Funds. Long-term goals are the ones that take more than 5 years, for example, higher education or their marriage. In this case, investing in Equity Mutual Funds can help your money grow and achieve these goals.
Create an emergency fund. This should account for any unforeseen expenses that could include medicines you didn’t consider for or certain emergences post-delivery. In the larger picture, also account for rising school fees, extra-curricular activities, etc that you hadn’t thought of earlier or prices have been affected due to inflation. Having at least three to six months’ worth of living expenses covered is a great place to start.
Additionally, there are a few important things to remember when you decide to go the goal based investing way.
First, understand that when you’re investing in goals, particularly of the long-term nature, don’t be hasty in making judgments about this approach not being profitable. This is because short-term performance isn’t the best indicator of your overall position and shouldn’t be used to gauge your success. If you stick to your goal-based investment plan diligently, you’ll find that you will be able to spend a lot more in the future than you think you are capable of.
Second, due to our lives undergoing constant change, our priorities and goals tend to keep changing. So, it is extremely important to review and re-plan any goals that might become void because of changing life situations and circumstances.
Third, don’t let your emotions be a barrier. While making investment decisions, fear or greed can get in the way of meeting your goals. Understand your behavioral biases to avoid costly mistakes.
Fourth, when it comes to getting advice regarding money matters, there’s no shortage of sources; family, friends, colleagues, insurance agents, advisors, planners, etc. Be smart in what advice you take on. There is a pressing need to gain a holistic view of your overall situation prior to creating any plan. The best thing to do is to get in touch with a financial planner to help you streamline your finances in a way that helps you achieve your goals.
While motherhood can be an exhilarating experience, it can be stressful too. One of the best ways to avoid financial stress is to focus on what truly matters. Thus, to experience financial success, it is important to step away from the language of “Returns, Products, Schemes”, and begin using the language of “Happiness, Purpose of Life, Goals, and Behaviour” instead. Because when each financial goal is being worked individually and systematically, you can stop worrying about money and start enjoying the happy moments of your life.
Article by Mr Amar Pandit, CFA and founder of Happyness Factory