Your First Child and 5 Ways of Financial Planning
PNB MetLife 19-05-2016 10:50:48 AM
From researching car seats and cribs to decorating a nursery, there's a lot to do when you are expecting a new baby. In addition to readying your physical house for your bundle of joy, you will also want to be sure your financial planning is in order.
There hardly is a more important time to start thinking about your finances. While it may seem overwhelming to add yet another item to your to-do list, some smart financial planning now will ensure you are prepared for the changes that come with having a child. Discover five financial tasks prospective parents should prioritise before their newest family member arrives. That way you can focus on child development and quality time. Read More
- Create or review your budget
You may have been living easily on one or two incomes without a child, but having a baby brings additional expenses - not to mention potential changes to your income. "When you're in the midst of it and you're trying to make ends meet and you probably haven't slept a lot - that's the worst time to start thinking about your budget.
For expectant parents, the first step is simply getting a clear picture of how much you earn, how much you spend and how much you save. That way you'll be able to make informed decisions about how much leave you can take, how much you can spend on child care and whether you can afford to reduce your work schedule going forward. Online budget tools can help you set up a monthly budget and track your expenses.
- Prepare for your parental leave
For most parents, quality child care for your newborn comes with a cost. You want to think about whether you or your partner - or both - are going to take time off work, and how that's going to impact your income.
Investigate whether your employer offers paid parental leave. If you plan to take unpaid leave, examine your budget to see how long you can last on an abbreviated income and then start saving for those paycheck-free weeks or months ahead.
- Contemplate quality child care costs
If you anticipate needing quality child care, you will want to explore your options. The cost of care varies by region and type of care (a day-care centre versus a nanny or in-home help. Assess what you can spend, investigate what's available in your area and consider creative ways to save. For example, sharing a babysitter with one or two other families or asking someone who is already retired in your family can greatly reduce the expense and, as an added bonus, gives your baby some instant buddies.
- Purchase life insurance
It may seem odd, especially if you are still young, but now is the time to start thinking about life insurance. Should something happen to you or your partner, life insurance can prevent further financial ruin and provide for your child's immediate and future needs. How much life insurance your family needs, depends on a variety of factors including your current income and housing costs.
- Create a will
Most people think of wills as a way to distribute your assets. But even more importantly, your will designates who has guardianship of your child in the event you and your partner pass away. Creating a will doesn't need to be complicated. You can even use an inexpensive online service or store-bought documents to name a guardian. But doing so is imperative: If you don't choose someone, the court will choose a guardian for your child - and it may not reflect your wishes.
For expectant parents, the months before the baby arrives can feel like a whirlwind of activity. But taking the time to financially prepare for your little one can provide peace of mind during this busy time, and allow you to focus on your family and child development after your baby's arrival.