5 Financial Planning Tips for Expectant Parents
Bringing a child into this world can be exciting and scary at the same time, and along with the emotional implications come the financial ones as well. There’s a lot to organise before your baby arrives and financial planning is an important part of that preparation. The minute you first hold your child in your arms, the last thing on your mind may be money, so it’s a good idea to take the time before you give birth to do your financial planning with your partner. Here are four tips for ensuring that you start your family on strong financial footing.
Having and raising a baby is costly, so
establish early on with your partner where you stand financially. Communication
is key at this point and you both need to take an honest look at the current
A good place to start is by finding out what your maternity and paternity leave options are. You need to know how much time you’re allowed off and whether or not your leave will be paid or unpaid. This is an important factor to consider as it will have a direct impact on your finances. You may want to make allowances now in order to compensate down the line for a lack of income.
Very often, couples feel they need to do everything all at once, but this doesn’t have to be the case. It can be overwhelming deciding on what to buy for your baby, so you need to try and avoid buying anything and everything – having a baby should not be an excuse to purchase things you can’t really afford and you don’t actually need. Unless the car you currently own has two doors or is not entirely roadworthy, you don’t need to buy a “family car”, and unless the space in your current home is really limited, you shouldn’t worry about moving into a larger place. Consider putting the major upgrades on hold, even if they seem especially tempting. There will always be necessities your baby requires, and whilst the added extras are great to have, they may not be necessary.
From the moment you find out you or your partner is pregnant, you should consider starting to save in the form of an emergency fund. Once you know how long you or your partner plan to take off work, you can then start to save accordingly, so that when the time comes, you’ll hopefully have enough money to see you through the months when the income will be limited. You can prepare for many of the expenses that come with pregnancy and birth, but there will always be those surprise ones you didn’t see coming – this is when having an emergency fund to dip into will come in very handy. This will also help when the time comes for you to return to work as then you may have to consider child care. This emergency fund can see you through pregnancy and beyond, if you plan carefully.
Many people opt for life insurance cover soon after they get married, especially if they’re financially responsible for their partner. Once you know there’s a baby coming, it’s a good idea to consider investing if you haven’t already. If you’re the breadwinner, you’ll be responsible for another person’s wellbeing once your baby arrives. Investing in life insurance is a way of putting the necessary measures in place that will cover your loved ones in the event of your death. A life insurance policy can help to give you peace of mind that should you no longer be around to financially support your dependents, they won’t feel financially burdened and have to adjust their lifestyles too drastically.
Something else to consider: Have you thought about updating your will to include your new child, as well as a possible guardian, in the event that both you and your partner die suddenly?