If you have recently become a parent, you might be experiencing both exciting and exhausting moments. The arrival of a child calls for revisiting your short-term as well as long-term financial goals, and readjusting them to accommodate your child’s future financial needs. You may have to drop a few plans and work on new strategies to meet the new challenges of becoming a parent. One new entrant in the portfolio of expectant and new parents would be an emergency fund. This fund would help you in meeting urgent financial needs, thus saving you from breaking your savings or investments.
In this article, we will take a look at how emergency funds can help you sail through tough financial situations.
Child’s Health Needs
A newborn is at a higher risk of getting affected by illnesses and infections unless proper precaution is taken. Besides, children of that age group need a lot of vaccinations to prevent certain illnesses. If you have a Health Insurance Policy and have added your newborn to the policy, the benefits may not accrue immediately. Therefore, you cannot rely on the health plan at the moment. You must create an emergency fund which will give you financial support in case of any medical attention required by your new-born or to fund the costly new vaccinations.
Child’s Education Needs
You may also have plans to get your child admitted to the best school in your city. And education even at the play group level is extremely expensive. With age, the need for financial support will only increase with time. You may have to shell out a good amount for school trips. This is where an emergency fund may come handy to meet the sudden needs of your child.
After you become a parent, one thing is clear that you cannot cut down on any expenses related to your child. You would ensure the best in all aspects for your child. Some expenses related to for the child’s health, studies or hobbies will be fixed. Risks such as a loss of job, a house makeover, any emergency medical treatment for you and your spouse cannot be overlooked and in the event of an emergency, the fixed expenses have to be met. In such a case, an emergency fund can come to your rescue. You can use the fund to meet your requirements during the income-less months before a new job; pay off the house bills; meet the emergency medical requirements while continuing with all the fixed expenses related to your child.
Hence, an emergency fund is of utmost importance for new parents to add a layer of protection for their new-born.
(The writer is CEO, BankBazaar.com)