Motherhood is physically and emotionally overwhelming.My daughter was born much earlier than the due date. The most important event in my life was most unplanned! I was totally unprepared for the roller-coaster ride that followed. In the initial few months, I kept thinking that if I had some clarity I would have been better prepared. After 4 years I have wizened up. I know nothing can emotionally and physically prepare you for motherhood. It is a task which is learnt on the job itself.
But one thing one can definitely be prepared for is the financial aspect of having a baby. So if you are planning to start a family or already expecting one here are my two bits of my learning
Maternity leave is your right and you must avail it. Don’t jump ship before that. There will be plenty of time to quit later if you so decide but you must benefit from the paid leave after all the years of hard work.
Know your rights under the Maternity Benefit (Amendment) Act, 2017
As per the Act, to be eligible for maternity benefit, a woman must have been working as an employee in an establishment for a period of at least 80 days in the past 12 months.Payment during the leave period is based on the average daily compensation for the period of actual absence.
The period of paid maternity leave that a woman employee is entitled to have now been increased to 26 weeks. Further, the Act previously allowed the expecting mother to avail Maternity Benefit for only 6 weeks prior to the date of expected delivery. Now, this period is increased to 8 weeks
Every establishment having 50 or more employees are required to have a mandatory crèche facility (within the prescribed distance from the establishment), either separately or along with other common facilities. While this is still being implemented at most organizations, do find out if the same is provided by your organization.
Check your employer health insurance for maternity cover. Usually maternity cover comes with a maximum cap and a waiting period. Plan for a higher amount, as hospital stays these days cost a bomb and god forbid if you or the baby develop some complication then the cost can skyrocket. Also, know that newborns are covered from day one so in case of any Neo-Natal Care charges don’t forget to get the baby registered with your insurance company. You don’t need to name the baby to register him/her for insurance. Until many months he/ she will just be called as “your baby”
Returning to work
Mothers should keep an open mind. Even women who have every intention of returning to work can have a change of heart once the baby is born. Working mothers should have a contingency plan that builds in all possible outcomes – digging deep to figure out what becoming a stay-at-home mother would mean for you and your family.
Here are few tips to ensure financial comfort when your child is born
Buy an additional health cover: Health covers offered by employers have few restrictions on the amount that can be claimed in case of maternity which in most cases is inadequate. It is advisable to take an additional health cover with maternity benefits at least two years in advance as most health insurance has a waiting period for maternity coverage.
Buy a life cover: Buy a term plan for yourself and protect your child financially. This will be the best gift for your child. A term plan provides death risk cover for a specified period. In case the life assured passes away during the policy period, the life insurance company pays the death benefit to the nominee. It is a pure risk cover plan that offers high coverage at low premiums. Read more here
Invest in Mutual Funds: Babies come with a lot of expenses including immediate ones and longer terms ones to comfortably meet them start investing in mutual funds. Decide on an amount that you can easily put aside and use that to start a SIP (Systematic Investment Plan) specifically for your baby and keep stepping up this amount as your income increases. Thumb rules of investing remain the same if you are investing for a goal which is many years away, invest in equity. If your timeframe is three to five years, then be conservative so that you are able to negotiate your goals better and you have the greater predictability of having the money and it is not dependent on the state of the market.
My suggestion, if you are planning or expecting a child, is to start a SIP in a well-diversified equity mutual fund. You can invest monthly, quarterly or whatever frequency you are comfortable with. Even if you invest a defined amount just on the child’s birthday and increase it by a certain percentage every year, that is also a SIP and if you keep doing it for 15-18 years you will see the magic of compounding.
Invest in Public Provident Fund: Provident fund helps us save for our retirement. In India where we don’t have a state social security, a provident fund is an important tool to save for retirement. Once you will stop working investments in employer provident fund will stop you need to ensure that you have a sufficient pool for retirement. Hence it is important to have a public provident fund account in addition to employer provident fund. Open a PPF account if you don’t have one already.
Open a National Pension System (NPS) account: NPS is another tool to save for retirement. Open an NPS account and start putting aside some money every month/ quarter.
So mommies and mommies -to- be, you are already in line for the roller coaster so brace yourself for an amazing ride. Just tighten the seat belt and enjoy!