There’s a lot to think about when you’re expecting a baby. Buying furniture, setting up a nursery, and filling their wardrobe are joyful experiences for new mums and dads. This happy glow makes it easy to overlook more mundane or less fun tasks, but they’re just as important.
Planning for your financial future is often ignored when you’re young, but with a baby on the way these details are more pressing. Here are six steps to add to your pre-baby prep list:
- Plan your parental leave. Deciding who will stay home with the baby, and for how long, should be worked out as early as possible. One parent may prefer to be your bub’s primary carer, or you and your partner may want to take it in turns. Consider any government parental leave payments and your employer’s leave policies. Your career goals and budget may dictate who can stay at home and the length of leave available. Speaking of budgets…
- Budget for your new arrival. Babies are expensive. There are one-off costs, such as furniture and a car seat, but also ongoing expenses (diapers, formula, child care). After you’ve mapped out your parental leave, take a closer look at your current and post-baby budgets. You may find that you need to revise your leave plans or make cuts before the baby arrives. Once you’ve created a new budget, try living within it for a few months to avoid any nasty shocks after your baby is born.
- Top up your savings. If you don’t already have an emergency fund, now is the time to start one. Should you or your partner lose their job, having extra money saved will ease the financial stress whilst you’re job hunting. Financial experts recommend setting aside enough money to cover household expenses for 6-8 months. Use your new budget to factor in how a baby will affect your future finances. Also, take into account the job market in your industry. You may want to set aside more if you anticipate a longer job search.
- Purchase or update your life insurance coverage. Purchase or update your life insurance coverage. It’s hard to think about the worst happening to yourself or your family, but it could be a good idea, especially with a baby on the way. Life insurance is designed to help protect your family’s financial future should the unexpected happen. You can take out a new life insurance policy if you’re uninsured, or check your current policy’s coverage to make sure it still fits your needs. Once the baby arrives, remember to add him or her as a beneficiary to any policies you or your partner hold.
- Adjust your will. Again, it’s no fun thinking about what your family will do after you’re gone. But now is the time to update your will or have one written. Making these tough decisions before the baby arrives will help you avoid unneeded stress later on. Choosing a guardian for your child and providing directions for their financial future are important considerations to make. And don’t worry, you can always make changes to your will as things change.
- Keep funding your retirement. Making sacrifices for your children is part of being a parent. However, it’s important to continue funding your own financial future. Saving for retirement should remain a priority after the baby arrives. Added expenses may mean decreasing the amount saved in the short-term, but long-term goals shouldn’t be ignored. After all, you probably want to save your children the stress of needing to support you during your retirement!
If your family is expecting a little one soon, take the time to think about your finances. Work with your partner or other family members to insure that your future is secure.
About Author: Momentum Life is a leading provider of Life insurance and Funeral insurance in New Zealand.
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The content provided in this article is for information purposes only. The information is of a general nature and does not constitute financial advice or other professional advice. To the extent that any of the content constitutes financial advice, it is limited to Momentum Life products only and does not consider your specific financial needs or goals. You should consider whether the information is appropriate for you and seek independent professional advice, if required.
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