The joy of welcoming a new member into your family is unparalleled. However, it often comes with the need for a career break. This maternity career break, while essential, can lead to financial stress if not planned properly. Here's how you can plan your finances effectively during this period.
Understanding the need for financial planning
A maternity career break often means a temporary halt to regular income. However, expenses during this period can increase due to medical and childcare costs. Therefore, planning finances is necessary to ensure smooth sailing during a maternity career break. Let us look at some factors to stress the importance of financial planning before a maternity career break
Creating a budget for maternity break
Budgeting is a crucial part of financial planning for a maternity break. It involves understanding your income and expenses, and planning the future accordingly.
- Start by listing down all your expected expenses during the maternity break. It includes medical bills, baby supplies, and increased household expenses.
- If you expect your income to decrease during this period, you should strategise on how to cover expenses. This may involve reducing non-essential spending or exploring options to boost your earnings.
- Keep a portion of your savings for this transition period for childcare services or to cover expenses until your regular income resumes.
To secure your child's future
It's never too early to start planning for your child's future. The journey begins right from the first cry and goes on till your child becomes financially independent and stable.
- Investing in the right instruments can also provide you with an additional source of income during your maternity break.
- Consider investing in a mix of financial products like Fixed Deposits, Mutual Funds, and the Public Provident Fund.
Planning for medical expenses
Medical expenses can be a significant part of your budget during a maternity break. Planning for these expenses can help you avoid financial stress.
- Start by understanding the medical expenses that you are likely to incur. This could include hospital bills, doctor's fees, and medication costs.
- Check if these expenses are covered by your Health Insurance. If not, you might need to allocate a portion of your savings for these expenses.
- Allocate funds specifically for these expenses. Investing in Mutual Funds through a Systematic Investment Plan (SIP) can be an ideal option.
Maintaining an emergency fund
An emergency fund is a safety net that can help you cover unexpected expenses.
- Consider setting aside a portion of your savings as an emergency fund.
- This fund should be easily accessible and enough to cover at least three to six months of living expenses.
- You can consider storing this fund in a liquid Mutual Fund or a Savings Account for easy access.
[Also Read: 10 rules of thumb for financial planning and wellbeing]
Conclusion
With careful planning and smart investment choices, you can navigate the maternity career break without financial stress.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
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