The birth of Master Archie, son of Prince Harry of England, was greeted with much joy the world over. For parents, their child is no less than a prince or princess, even if they are not royalty themselves. A new addition to the family, is without doubt a reason to celebrate, but it also means additional expenses. While it is not a worry for someone like Prince Harry, for other parents who may not have anticipated the increase in their monthly budget on account of their new baby, we offer some tips on how to manage your expenses.
Plan in advance
Ideally, one should start planning well in advance. Expenses begin from day one, with hospitalisation charges for the delivery and vaccinations. If you are a salaried employee and are covered by your employer-provided health insurance, these expenses would be taken care of. Some individual health plans also cover maternity expenses. So buy a policy with this benefit if you are planning to start a family.
FDs offer guaranteed returns
For managing expenses after the birth of the baby, a good option is to invest in Axis Bank’s fixed deposits, which offer competitive rates and varying tenures. You can select tenures as per your requirement. For instance, for admission to playschools, which can cost anywhere between Rs. 30,000 and 40,000 and upwards, you can invest in a three-year FD. If you don’t have a lump sum amount to invest, you can opt for Axis Bank recurring deposit. The rates are the same as FD rates, with the added benefit of investing on a monthly basis. You can use the Axis Bank FD calculator to find out the amount you will receive at maturity. Based on this you can decide how much you need to invest and for what period.
For regular school fees, which can cost anywhere between Rs 50,000 to 1 lakh in a metro city, you can time your FDs such that they mature at the beginning of each academic year, thereby ensuring you have enough funds.
The advantage of a bank FD is that the amount you will receive at maturity is guaranteed, as the interest rate is locked into at the beginning. The interest rate for the FD remains unchanged during the entire period.
As your child grows up, there will be additional and recurring expenses, such as fees for extra circular activities and coaching classes, charges for school excursions, and so on. As these costs are certain and fixed, it is easier to be prepared for them financially.
FDs are easy to redeem
Compared many other financial instruments, a bank deposit is one of the easiest to redeem. You can give instructions to your bank to credit the maturity amount to our savings bank account, which is linked to the FD, This will make it easier to make payments. Or you could also ask the bank to extend the FD for whatever period you choose, in case you don’t need the funds. In fact, you can even open the FD through the Axis Bank website or through Axis Mobile, without visiting the branch.
If you want to redeem or liquidate your FD before maturity, that is also possible, though you may be charged a slight penalty. When interest rates are high you could even consider investing in a 10-year long-term deposit in order to earn maximum returns.
Include FDs in your savings portfolio as they offer safety and security of your funds.
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.