Expecting or planning to have a baby?

Once you learn about the new member, all you’ll want to do is dream – will it be a boy or a girl? How will her/his eyes, hair, smile, etc be like? Will he/she resemble you or your better half?

As exciting this time is; it can turn out to be expensive too. Sooner or later, you’ll have to come back from the dreamland to face the financial reality! The faster you work out your finances and start saving, the better for you, as it will help you get a headstart.

A new member is about to be added to your family and yes, it’s a huge deal. However, that shouldn’t affect your lifestyle. All you need is good planning and preparing. Here are the things you need to consider when planning for the finances after the arrival of the new member of the family.


Understand your current financial standing

Start by understanding your monthly financial standing. This must cover all your monthly spends including all your loans and different modes of incomes. Then match and analyze both to each other, and see what the difference is.

If the difference is negative then you'll have to ensure that you increase your income to match up to your expenses, and in any case you need to understand the anticipated expense of the baby and accordingly plan it ahead.


Take stock of all the upcoming expenses

Every family is different. So is every family’s future plan for their children. However, there are some basic expenses always remain the same. Here's a list of them:

  • Nursery setup: This will include a cradle along with a mattress and pillow.
  • Car Seat: This is important to ensure the safety of your child while travelling.
  • Baby Stroller: Now-a-days strollers come with lot of conveniences for the parents when taking the kid out for a stroll. From storage, to baby's safety and protection from the sun, dust or rain; strollers now-a-days are fully loaded.
  • Baby Nappies and Diapers: These are two of the recurring expenses that you will incur. Cloth nappies can be big savers here but do consider the washing costs and effort. Also choose the products that suit the sensitive and delicate skin of your child.
  • Food and Formula: The food babies eat is not the same as we do, making it an additional expense. This further includes buying of pumps, bottles, and formula, etc. Buying in bulk or wholesale can be a great way to save money.
  • Day Care Centres: The cost of enrolling children in childcare centres has increased dramatically over the past decade. They account for a major chunk of the initial expenses. You can opt for home schooling or choose a day care centre wisely, that nurtures your kid at an early age.
  • Clothes: Babies grow fast and those adorable outfits become useless after sometime. In addition, friends and family fill your house with clothes as gifts too. So don’t spend too much on clothes.


These are only initial expenses that will occur in the first year. You must also consider and include all other expenses that you have in mind. These could be your child’s marriage, education, life insurance, health insurance, etc. To read more about what all expenses you will need to save for in the course of your parenting life, check out the articles in the related section.


Create a Shopping Strategy

When you go to a shop and see those cute little outfits, pretty little accessories and those miniature toys, you are bound to go all out and splurge, after all it’s your time to relive your childhood vicariously through your kid. But you need to control your horses. It's difficult, but you can by creating a shopping strategy.

Before you spend a single rupee, first understand your needs, wants, and your budget. Create a list of must-haves, and keep the purchase of gender-specific products for post-delivery to avoid wastage. Once your list is ready, spread out your purchases across several months.

And if you still wish to go ahead with these gender-specific expenses, keep two things in mind – one, buy products that are unisexual, and second, understand the return policy of the place you're buying it from.
This is ideally done to avoid a sudden expense.


Saving and Investing

The first thing you must do is start living on a single salary (if you're not); to avoid financial implications after one income stops post-delivery. It will allow you to get comfortable with the amount and will also enable you to build up some savings.

In addition to that, also start including your baby’s expenses in your daily life from before the delivery itself. This is to take into account the day-to-day costs that add up into your budget. Some of these include diapers, food, clothes, medical bills, babysitters, laundry, utility bills, etc. This exercise will only help to prepare you in advance.

While at it, start a savings account and investing process too. Be it for health, education, their future needs, marriage etc. it is beneficial to start investing early. Click here to look at different investment options.

To read about different investment options for your child as per his/her life stage, check out the related articles.

All in All – the key takeaway from this is that, whether you start a baby fund separate from other savings or not, having savings and investments can really help you sail through the biggest changes of your lives.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.