Are you at the stage in your life where you are readying to welcome a new member to your family? Congratulations on your decision! Family planning is indeed a great step ahead. But as you may be already aware, a new child in the house means that your responsibilities will increase manifold. As a parent to be your first responsibility to be financially prepared. Here is a low down on what you should do to ensure that your adequately prepared financially before the birth of your child.
Assess your credit health
You should be able to welcome your baby in a peaceful state of mind where you are debt free or your debt situation is well under your control. The first thing to do therefore is scrutinize your credit health and improve CIBIL score. You can start by assessing your debt as portrayed in your CIBIL report. If your debt is well within your control and your CIBIL score is above 750, you have little to worry about. However, if it is anything below the level of 750, you have to improve CIBIL score.
Check for errors in your CIBIL report
Firstly, check your CIBIL report for errors. Sometimes, even if you are doing everything right, a wrong entry against your name or a closed loan account that is erroneously shown as being open can be the reason why your CIBIL score is low. If an error is pulling your CIBIL score down, you need to raise a CIBIL dispute to rectify the error. Once the resolution comes through, the records on your CIBIL report will be set straight and finally reflect on your CIBIL score.
Pay outstanding dues
If there are no errors on your CIBIL report and it is your debt burden that is weighing down your score, you need to take a different approach. Often it is credit card debt that tends to go out of hand and is responsible for pulling down one’s CIBIL score. The debt must be repaid as soon as you can to improve CIBIL score. Firstly, try to liquidate some assets to repay your outstanding dues. If that is not an option for you, and you are at a loss about how to improve CIBIL score, consider loans for bad credit. These Loans can help salvage your debt situation as you can pay off your credit card debt at one go. Further regular repayment on one such loan will help you rebuild your credit score.
Keep in good credit health
Once your debt burden is taken care of, you must keep up good credit habits. Automate all your debt repayments and use your credit card judiciously. You should not let your credit utilisation (the amount of credit you use as against the total credit made available to you) exceed 30% at any given time. Finally, opt for credit only when you need it. Too many applications for a credit line in a short span of time will result in successive hard inquiries. Hard inquiries in turn will pull down your CIBIL score.
Preparing for the baby’s arrival financially
Once your debt burden is out of the way, you need to review your existing investments. Needless to say, insurance is the first thing to consider. So, beef up your insurance coverage to ensure that your family’s financial needs are taken care of in your absence. Next, choose your investment options carefully according to your risk appetite and invest according to your long-term goals. The best thing to do is set aside a regular sum of money monthly. You can use the systematic investment plan route of mutual funds and increase this sum as your salary increases.
Save and invest
Once the baby arrives, your expenses will see a sudden spurt. Besides, a working mother, has to plan for her leave without pay well in advance. Once again, planning and investing is the key. Cutting down on regular expenses and readjusting the household budget will free up some cash that can then be invested according to your risk appetite.
A baby in the family brings immense joy and pride and as new parents you will want to give the best to your child. Responsible use of credit and planning your finances well will ensure that you can have the right start before your baby makes a grand entry into your lives!
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