Lifestyle

How to Financially Prepare for Starting a Family

3 Mins read

Having a family is a beautiful experience. You’ll get to enjoy first birthdays, family vacations, ballet recitals, graduations from kindergarten to college, soccer goals, and so many more amazing moments. However, are you ready financially for them? Have you started to compare life insurance policies in readiness for what awaits you?

If you add up everything from diapers and daycare to birthday parties, music lessons, and hockey gear, you’ll be delighted you planned. Here are some financial tips for preparing to start a family while you are still working.

1. Start saving now.

Lack of significant saving plans puts you at risk of slipping into serious debts when unforeseen costs emerge—and kids are full of surprise expenses, too. When you save, you are doing it not only for yourself but for your children as well. Other than saving for emergency expenses such as car repairs, illnesses, and job loss, also save for ingoing and upfront costs related to starting a family. They include expenditures for things such as:

  • Car seat and stroller
  • Diapers
  • Cots, mattresses, nappies, clothing, bottles, and formula
  • Childcare
  • Food

If you or your partner decides to leave their job to take care of your child in a full-time capacity, you might experience extra expenses associated with raising a child with reduced income. Start saving now!

2. Don’t forget to take unexpected medical expenses into account.

Your family finance budget shouldn’t miss the medical costs of having a baby. This includes regular checkups, birthing classes, ultrasounds, and vaccinations. Although you might have a private health fund, having finances to pay such medical costs is still necessary. It might be a while before you can obtain funds against your pregnancy or birth-related insurance claim.

Other than average medical expenses, your private health insurance might not cover all your birth-related costs. Even if you decide to give birth in a public health facility, you might still need to pay some out-of-pocket expenses. Your costs will depend on where you choose to give birth, the type of delivery, and any health complications before, during, and after childbirth. Thus, saving for birth-related medical expenses is still essential.

3. Reevaluate your benefits.

Labor laws in some countries—for instance, the US—do not mandate employers to gives employees maternity or paternity leave. However, your organization might have policies that entitle you to those benefits, including unpaid and paid parental leave benefits for new fathers and mothers. Enquire from your employer to find out if there are any benefits to your case.

Nonetheless, companies are attempting to expand their maternity benefits. Employers have realized that such offers improve employee retention rates and are excellent motivational tools.

If you can’t secure paid parental leave, make extra contributions to your emergency fund while you are still working. Additionally, inquire from your employer about the company’s policy on payment of superannuation while on unpaid leave. Superannuation is a contribution your employer deducts from your pay and remits it to a fund, where a trustee invests it on your behalf to grow your savings. If they don’t pay, you might need to make extra contributions while you’re still salaried.

4. Buy an insurance plan.

We don’t like thinking about it, who will provide for you or your child in the event of your death or permanent disability (the latter of which may mean you either can’t work anymore, or you may be working and making less). Policies worth considering include:

  • Health insurance: You can make changes and add a child to your health insurance after adopting or having a baby.
  • Disability insurance: If your employer doesn’t offer it, buy your disability insurance. Buy a policy that covers full living expenses for your family during the whole disability period.
  • Life insurance: This type of insurance pays a certain amount to a named recipient after your death. Both you and your partner should have life insurance, even if only one person works outside your home. There are many life insurance policies on the market. Compare life insurance with iSelect and pick a plan that best suits your budget and objectives.

5. Create a budget.

After considering the expenses for starting your family, the benefits you are entitled to, the aid from the government and your employer, and how long you may remain unemployed (if this is the case) might help create a budget and start saving for your family’s future.

Starting a family can be extremely thrilling, but it is also demanding and expensive. According to Forbes, the average cost of raising a single child nowadays $ 250 000 in the US. This amount excludes college tuition. Would you like to provide your future child with the best things in life, like studying at a top-notch school and taking them on several trips abroad? Well, start preparing financially now!