Steps to help you financially prepare to start a family
Do a family budget
Having a kid is expensive! Whether it’s the supplies you need to prepare your home for the baby, or the items that you need to pay for to maintain the life and health of the child moving forward.
It’s important to understand what these one-time and ongoing costs will be, so that you can create or adjust your family budget accordingly. And if you have a mortgage, review it to see if you can increase your cashflow by refinancing to another lender, preferably before falling pregnant or well before the due date, the extra cash will be very handy with an extra family member.
Some things to consider:
Nursery items
Childbirth and parenting classes
Medical costs associated with prenatal appointments
Medical costs associated with delivering your child
Insurance changes once you add a child to your plan
Costs related to feeding: breastfeeding supplies, formula, food, etc.
Clothing and accessories
Car seat and other travel items
The costs of upgrading to a more spacious home
Childcare costs
Complete your estate planning
You can never anticipate the things that might happen, or when illness, injury, or death will come along. That’s why it’s so important to plan ahead and get organized so that your family will be taken care of if something is to happen. Here are the main things you should do as you think about having a child:
Get life insurance. If you are the breadwinner, you want to make sure that your life insurance is enough to financially support your family for years to come. Even if you are not the breadwinner in your family, it is worth getting life insurance. Look at how you support and contribute to your family. Non-financial contributions matter too, especially when you take childcare into account
Create a will. This is something you should do if you have any meaningful assets, regardless of whether or not you have children. However, it becomes even more important when you have people who are dependent upon you.
Set up a will that clearly outlines where you want your assets to go in the event of your death. If you can’t afford to hire a solicitor, consider the free service offered by the Public Trustees Office.
Designate a healthcare proxy. Make sure you designate a healthcare proxy and make your wishes known so that your family knows which decisions they should make for you if you were to become sick or injured and unable to make your own medical choices.
Not only does this ensure that your wishes are followed, but it will take a lot of pressure and stress off of your family during an already difficult time, especially if there’s difference in opinion around organ donation.
Choose a guardian for your children. This is a hugely important step. Once a child is in the picture, you want to make sure they will be properly cared for if you and your partner were to become incapacitated or pass away. If you don’t designate someone specifically to care for your children, the state will have to make that decision.
Talk to your loved ones and figure out who would be a good fit. Make sure that the person you choose also feels comfortable taking on this enormous responsibility. You should also make sure that this decision is noted in your will.
Check how your home loan compares
Review your retirement planning
It’s so important to remember that while you can take out loans for things like buying a home or a car, you can’t actually take out a loan for retirement. When we are caring for other people, it can feel like we have to prioritize them over ourselves at every turn.
Truth is, if you don’t prioritize your retirement planning, everyone will end up being hurt in the long run. If you don’t have enough money invested to care for yourself in your retirement years, it’s likely that your children will have to be the ones to care for you, physically and financially, if needed.
So, make sure to review your investment plan early on while you’re starting a family. At the very least, make sure you’re contributing to your Super. If you can, reach out to a proven financial planner to get guidance and support so that you know you’re allocating your money in the right way to reach your long-term financial goals.
Plan your parental leave
If you are going to be a working parent, make sure you get really clear about what your parental leave will look like. Find out exactly how much time you’re allotted through your employer. Your partner should do this too. Everyone should be taking as much parental leave as they possibly can, so that you can get the healing and bonding time you need.
Once you understand your parental leave policy, start working with your manager to create a transition plan. This can be a really powerful move for your career, as you show that you want things to move smoothly while you’re gone and continue to succeed when you come back.
If parental leave is not an option for you, see if there are other solutions you can take advantage of, on top of the mandated governments paid parental leave.
Don’t make any big life decisions within six months of your child’s birth
Do not make any major life decisions in the first six months after your kid is born. Ideally a year, but the first six months after your kid is born, they will be changing constantly, you will be changing dramatically, you’re going through hormonal stuff - you might have postpartum depression - there’s a million different things that can happen in that six-month period.
Whatever your plan was - you’re going to go back to work, you’re not going to go back to work - stick to it and re-evaluate after six months. Once you’re able to adjust to your new life circumstances and get back to a place where you feel more like yourself again, take the time to re-evaluate your life decisions.
If you follow these steps as you prepare to start a family, you’ll be much better off, both financially and in terms of stress. You’ll know that you are doing the things you need to do to protect yourself and your family from financial hardship and uncertainty. Good luck!
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This article via forbes does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.