Expert advice: Financial tips for new parents
The tough economical conditions that most parents find themselves in have left many wondering if they will be able to provide for their children's future? Here are five great tips to help you.
Sunday 21 June is Father’s Day – and if you are a new parent, there are not only nappies and bottles to get to grips with, but also new demands on your wallet. In your pre-baby life you might have scanned ads for off-road bikes, now you’re thinking about baby slings and strollers.
What really is the best for your new little bundle, and what should you focus on as you re-examine your financial priorities?
“Plenty of love and care are important,” says Sarah Nicholson, who juggles being the mum of two busy boys with a demanding job as Commercial Manager of personal finance website JustMoney.
READ: Saving for your child's education
“As a newly inducted member of the sleepless nights club, you’re probably feeling exhausted and disoriented at all the responsibilities and new demands on your time. You want to do what’s best for your baby, but choosing what is really necessary can be hard when you’re bombarded with so many products and services.”
READ: The newlyweds guide to handling finances
A quick scan of baby offerings on a popular website revealed 144 travel accessories alone. No wonder we get confused.
“It’s important to start planning and adopting new habits now, so that you are prepared for future costs such as education,” says Sarah. “Appropriate insurance will also ensure that if you or your partner cannot earn an income in future, at least some of your child’s needs will be met.”
Tackle debt: If you’ve been making use of debt (such as a credit card with high interest rates) to support a lifestyle that you can’t really afford, it’s time to free yourself up. On the other hand, a strategic investment such as a home loan can be a positive move. Read about the difference between good and bad debt here.
Set goals that will help you to secure a healthy financial future for your family. Plan your monthly budget, and determine how much you can save. Once you’ve paid off your debt and saved enough to cover about three months’ worth of living expenses, you can consider investing. Read an article on how to avoid common investment mistakes here.
Cover yourself: Insurance policies that deal with life-changing events such as disability, death and retirement provide security through either a lump sum payment (for example on the death of a spouse) or an income in the long term, for example if you are disabled and cannot carry on earning a salary. Examples of long term insurance policies include life insurance, funeral policies and retirement annuities. To get a life cover quote, click here.
Make the most of medical aid: If you’re a member of a registered medical aid scheme, your new baby should receive immediate cover. Check your plan to see if there are any particular perks for babies, such as a dedicated programme for newborns. The best medical plan for you and your baby will depend on the baby’s needs and your budget. Read a comprehensive, easy to understand guide to medical aids here.
Plan for education: Many parents choose a dedicated education plan to save for high school or tertiary education fees. Keep in mind that education involves more than school fees – you’ll also need to consider sports outings, gifts for schoolfriends’ birthday parties, aftercare and transport. To read more about various education options, such as a tax-free savings account, a unit trust, or an endowment, read here.
Article source: Meropa Communications