Starting a new family is probably one of the most life changing events that anyone can experience. Along with this joy comes many expenses foreseen and unforeseen. Preparing for this event is vital in preventing any financial strain over the next few years. It is important to make financial arrangements as early as possible.
We look at a preparation check list and tips on managing finances.
- Add your children to your health insurance plan – this might seem a silly task, but it is often forgotten. Your health insurance company will not remind you. You child needs to be covered from their birth. Infant illnesses are common, and you will need that cover to prevent unforeseen pocket expenses.
- Get term life insurance – this is vital in providing for your family in the unfortunate event of your demise. If you have been putting this off, now is the time. Make an appointment with your financial adviser and get this cover including a will and disability cover.
- Update tax to receive any child tax breaks – You might be eligible for tax concessions. Check with your tax consultant and update your details.
- Get a will and name beneficiaries – Now that you have children, it is essential that you get a will made stating your last wishes. Without one, the state could determine who gets what, and your spouse might not get custody of your children if in a shariah law country.
- Disability cover – if you lose the ability to work due to injury or trauma, who is going to provide for your family?
It is predicted that raising a child could cost as much as $2 million over 18 years, and that doesn’t include university. It is important to lay some good groundwork and get the basics right to ensure a smooth financial journey for your family.
- Know your new expenses – you need to know what your new expenses are going to be e.g. day care, nappies, clothing, formula, and baby food. Don’t forget the once off expenses of baby car seats, prams and strollers, and cots. Always forgotten are education plan and life insurance premiums.
- Rework the budget – Now that you’ve added up the extra expenses, you need to work it into the budget. You may have to relook at current expenses and cut on some to make the budget work.
- Rainy day funds – if you haven’t built up a rainy-day fund, then now is the time. There are always unforeseen and emergency expenses when it comes to children.
- Save for you own retirement – don’t ever put off saving for retirement. no one is going to look after you when you retire one day. Even a small monthly contribution now makes a difference.
- Think university education savings – university fees are very high so start an education plan for your children immediately, no matter how small the contribution.
- Keep it simple – the financial impact of having children are daunting to say the least. You won’t be able to think of everything, so keep it simple and stick to the basics of education and a rainy-day fund and add on from there. (forbes.com/money.howstuffworks.com)
Your deVere Acuma Adviser will help you sort out the basics of family finance. [email protected]
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.