Soon, Leela is expecting a baby. Her husband and family are overjoyed. They start advising her on the do and don’ts of pregnancies. It is then that Prakash, their friend and insurance agent, revisits Rajendra.
“Congratulations, my friend. I have heard the good news,” he says.
“Thank you, Prakash,” replies Rajendra. “Any money related advice for me?”
“Actually, yes,” says Prakash. “It’s more to do with planning for money.”
“Do tell me, my wise friend,” says Rajendra, now very happy that he has taken home insurance.
Prakash tells Rajendra about various costs that he should prepare for, now that he is going to become a father:
Costs during pregnancy: As Rajendra has already begun to realise, his wife needs special care during her pregnancy. She needs more nutritious food and food supplements – iron, calcium, and folic acid. She also needs to be taken for regular check-ups to the doctor. The doctor also advises a number of routine medical tests to ensure that the mother and baby are fine. Nearer the delivery, Leela registers at a private hospital by paying a deposit.
Cost of delivery and post-delivery care for mother and baby: Like his grandmother, Rajendra would like his wife to have the best care during and after her delivery. He would like the best doctors in the village to help with her delivery and check up his baby. In case, the baby has to be delivered through a caesarean section, it will cost more. As long as they set aside money for these needs, it is possible to give her and the baby the best care.
Cost of vaccinations and baby needs: After baby is born, there are many other expenses – baby’s clothes, toys, medicines, vaccinations and the list can go on. These can be kept to a minimum and purchased/administered at a minimal cost. But if the family wants to, there is no limits to the amount that can be spend on the baby. It all depends on how much you budget for or plan to collect in advance for these items.
Emergency fund: When you have a baby, your whole life changes. The baby’s health and well being become your first priority. Naturally, if anything happens to baby such as an illness or an accident – and these things do happen to most babies – you must have the funds ready to take immediate action towards making baby well as soon as possible. So, collect an emergency fund especially for the baby well in advance. If you are lucky enough not to need it till baby is five years old, you can invest it for use later.
A good education costs money. And when your child receives admission to a degree or post graduate degree programme of her choice, you must have the money ready. The secret to having it ready by then is to start collecting it right now.
But how can you estimate how much you will need?
The figure may seem very large, but you do not have to worry. If you save as little as Rs. 1,000 per month and invest it in a financial product which gives you a return of 8% per annum (without withdrawing the interest that you receive on it), you will collect a sum of over Rs. 4,85,000 over the next 17 years.
This is only an example but the message is that no matter how large the amount seems, investing small amounts at regular intervals will help you collect that amount over a long period of time.
Rajendra and Leela don’t know how the time has flown by. Their little baby – Preeti - is now a child of 10 years. She goes to the private school in the village and is studying well, under her mother’s guidance. Leela has also matured from a timid housewife to seasoned home manager. She also runs a small but successful embroidered saree sale business from a corner of the family grocery shop. She manages the household expenses efficiently, within the money that her husband gives her. She also saves and invests as well – with advice from their old friend Prakash, who now manages an investment shop, which offers all types of financial products.
She often thinks back on the days when she was young and financially immature. She remembers how electricity bills were often paid late; how her husband and she could not seem to manage within the comfortable stipend that they received from the shop; how she had longed for a trip to the city – to shop for Diwali - but could not afford one.
She is proud that over the years she had learnt how to manage money. She wants her little girl to learn how to manage money from as young an age as possible so that Preeti does not make the same mistakes that she made.Here are some of the lessons that she teaches her little one:
Source: Portal Content Team