Soon-to-be moms need Rs 3 lakh kitty before taking Motherhood career break

Kareena Kapoor Khan made style statements every time she stepped out with her baby bump. People like Yahoo CEO Marissa Mayer and tennis hot-shot Serena Williams, who earn millions a year, experience a different pre and post motherhood. But the truth for thousands of ordinary working women taking a career break due to pregnancy and motherhood is the big cloud of self-doubt and financial dependence hovering over them.

Financial experts told DNA Money working women have to prepare for a minimum of 24-30 months of lower income, and 40% spike in expenses once they head into motherhood. A kitty of Rs 2-3 lakh kitty will be just required, depending on lifestyle.

Preparation is the key: With women becoming mothers late, complications arise. This means paid maternity leave of 26 weeks isn’t enough. Nuclear family structures also mean that working women may have to give up their full-time careers till the child turns two years of age. Less income in this period means most liabilities will have to be borne by the husband. Also, after years of being your own boss when it comes to money, working women will find it difficult to rely on husbands for small and big expenses.

"In retirement phase, one is aware that he/she will retire at 'x' age and will have to support his/her life for as long as it lasts. Early days of motherhood is one such stage of life that when it begins, you don't know how long it will keep you off the block," remarked Abhinav Angirish, managing director, InvestOnline.in. Expenses related to pediatricians, medicines, day care, among others can bite the pocket pretty hard, addition to the expense of one member in the family who will not have a regular income for as long as it takes.

Budgeting is at the core of parenthood planning. A pre-baby budget can be made in the initial month of Pregnancy which can be divided into pre-delivery, in-hospital, and post-delivery expenses. “It is better to plan beforehand for all these phases than to be perplexed by low cash flows and increased expenses during maternity," says Sneha Mehta, partner, financial planning practice, TBNG Capital Advisors.

Two-step plan: The planning for expecting mother can be in two phases. Sushil Jain, national head, financial planning, Bajaj Capital, points out that firstly, she should plan for lump sum fund required at the time of delivery. She should take a medical policy which has maternity cover along with newly born baby cover which includes vaccination and other expenses. Apart from this, she should have adequate life cover.

“In second phase, she should try to find a job which provides facility to work from home which helps her to maintain regular expenses. Also, she should join some certification course during this period which helps her to update herself while she is out from industry, it will help her when she plans to restart her career,” says Jain. The other option, if she wants to go for a babysitter then she must calculate whether this option is financially viable, or not. For example, if the cost of a babysitter is more or equal to the net earnings (earning minus job-related expenses) than it is advisable to stay at home and do some freelancing work.

Getting down to brass tacks: A lady who is going to take a break can increase the amount in liquidity to say Rs 2-3 lakh, to provide for any expenses that may be necessary after the birth of the child and can also provide for her own personal expenses if needed, Suresh Sadagopan, founder, Ladder7 Financial Advisories. Any regular investments – like Systematic investment plans, recurring deposits, etc., may have to be stopped for the next few years, till she resumes work. If necessary, some income can also be setup for her – we would suggest setting up a systematic withdrawal from a debt fund.

“The investments done in the past can be retained, only doing the review of the portfolio from time to time. She could start some investments for the child, carving out a potion from her corpus itself. The investments she could consider are – PPF, Sukanya Samriddhi Scheme and some equity oriented funds,” adds Sadagopan.

PLAN AHEAD

• Working women will find it difficult to rely on entirely husbands for expenses
   
• It is quite hard to predict how long the new mother will require to stay home
   
• It is better to be plan beforehand than to be perplexed by rising maternity expense
   
• New mothers can consider public provident fund, other plans