Starting a family
The arrival of children brings enormous change to our lives. Starting a family, whether planned or unexpected, presents its own unique set of financial challenges.
Understanding the likely impacts of the arrival of your little bundle of joy will ensure that you are better equipped to take on the challenges children can bring . . . .
Are you financially ready for the extra responsibilities ?
With all the anticipation and joy that comes with starting a family, having children also marks one of the most significant financial changes in parents’ lives.
In today’s world, increased financial challenges, high unemployment, and an increased focus on the individual to save for retirement—make careful planning essential.
A University of Canberra report suggests that the average family must find more than $800,000 to raise two children, a rise of 50 per cent in six years. The price of parenthood has swelled from $537,000 in 2007 to $812,000 in 2013.
To better ensure that you’re sufficiently prepared for the changes ahead, consider the following:
What’s the best way to budget for your baby?
Hopefully, you bring in more money than you spend each month. But you may find that you need to cut down on your expenses and start saving money to help pay for your baby.
If you’re going to stop working after your baby’s birth, now’s a good time to start practicing living on less money. The same goes if you’re planning to take unpaid maternity leave, even for a short time. If you work, ask your human resources representative what kind of maternity leave your employer has.
What kinds of things do you need to buy for your baby?
Have you adequately assessed the need for the “pick ticket” items you may need to plan for in advance? Do you need to make renovations to the family home. Is your clunky 1994 Commodore safe enough for the new prized cargo, or will you need to upgrade your car? Add up the big baby-ready costs, and create a plan to address them.
Shopping for your baby can be fun. Like lots of parents, you want the best of everything for your little one. But this shouldn’t mean you have to break the bank.
With a new mouth to feed make sure you’re ready for all the little costs that quickly add up. Will you have enough income to cushion the extra spending? Stick to a budget.
Have you researched parental leave options?
Maternity and paternity leave (also called parental leave) is time off from work for mum or dad after their baby’s birth.
It’s important for you to know what kind of parental leave options are available from your employers, including how much time (off) is offered and how much time is paid. Then you’ll need to consider the impacts to your family income and how much time you can take off. Do you need to ramp up savings beforehand, what are the consequences if the mother decides not to return to work?
What do you need to know about health insurance?
Your ‘couples’ health insurance might have sufficed before, but will it meet the needs of your new family? Now is the time to review policies and benefits to understand your options. Ask yourself whether your current plan covers both parents and children’s needs completely and economically.
What do you need to know about personal insurance?
It really doesn’t matter how careful you are, there are things in life that are beyond your control. Even the most carefully constructed plans can come undone through an unexpected event or illness, and without adequate protection the result for you, your business, your loved ones, can be very traumatic.
The need to protect yourself, and your family, heightens the need to ensure you have adequate covering the event of something unexpected happening. Insurance can give you the peace of mind and assurance that you will have the ability to get on with life after any serious event.
You should review your cover and that of your partner as soon as possible to ensure the new member of the family is adequately covered.
Do you need a will?
Yes. A will is a legal document that gives directions for what you want to happen in the event of death. More importantly estate planning will also identify who you want to take care of your children and what happens to your money and belongings.