A reader asks, “Sir, my boyfriend and I are about to get married. Both of us want to have children. Can you please write an article on how to prepare for parenthood financially?”
Although I welcome and admire it, most people may dislike this line of thinking. For them, childbirth is a gift and should not be hampered by too much planning. Perhaps they are right, but there are bills to be paid, and they will not pay them.
The arrival of a child will change your life. However, it should not change your lifestyle. Many parents tend to go overboard in buying toys and amenities for their children, and they forget a key aspect of living and parenting: frugality. Spend on what is necessary to the extent that you can afford it. Never give the child the impression the parents will buy them anything they want if they just ask for it.
The expenses in the first couple of years would typically include diapers, infant formula, vaccinations and periodic visits to the doctor. These should be handled only from your joint salary.
Pre-school or school fees can be quite high depending on where you live (even within the same city). Find out right away how much this would be and start a recurring deposit for it such that it would mature around the right time.
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Ideally, you should be able to pay the recurring tuition fee from your salary (via annual RDs). If you cannot pull this off, you are probably seeking an expensive school, or you may need to delay parenthood for a year or two (this has health risks). So do not go by my advice alone. Parents and in-laws would typically scoff at this mindset and ask you to take the plunge and “manage along the way”. If you heed this advice, think about what “manage” means. Does it mean reducing your lifestyle or dependence on your parents or in-laws? Needless to say, the latter has to be avoided.
Ideally, you should have left to invest for the child’s college and a lot more for your retirement. If there is a shortfall, make a cash flow table with your projected salary hike and find out when you can continue investing for goals as usual. You can start a family if it is not too far away (say, > 5 years). Else delaying is an option.
Please keep in mind that natural childbirth has a short time window. So if you have the urge to start a family and are confident that you will “dekhlenge” (manage), then go ahead. It is important to plan but also important to over-plan. The considerations mentioned above should take no more than a weekend to decide!