Having a child is amazing and will be a life-changing experience. However, the outbursts of a baby won’t be the only source of disruption in the house. A change in your financial situation could catch you and your partner off guard by a big surge in unexpected expenses.
Whether you’re expecting a baby or are already counting the days, it’s essential to prepare financially for the bumps in the road ahead until your little bundle of joy is born.
Here are five financial tips to consider as you and your partner await the arrival of your baby:
#1 Make a household/ baby budget
New parents should begin their financial planning journey by creating a household or baby budget.
Do not put off budget planning and wait until your child’s birth; the sooner you start, the better you will understand your financial situation. After giving birth, you may find yourself lacking the time and energy to sit down and prepare for your new budget as you juggle your responsibilities from caring for a newborn to adjusting to new parenthood’s demands.
Becoming a parent will include trial and error, especially for the first time parents. Nonetheless, with the expansion of e-commerce and parenting resources available today, arriving at a reasonable estimate of your total expenses that’s close to the target budget wouldn’t be that difficult for you.
That way, you can assess whether or not your family’s financial resources are enough to support a new baby, and if they aren’t, you’ll be able to take remedial action as soon as possible.
Making a budget also allows you to determine whether you can afford to spend money on indulgences like post-natal massages, a confinement nanny, or healing supplements. If you can’t afford them, you may look into other options, like asking for some assistance from your family.
It would help if you also planned in advance for the important events such as birthdays, anniversaries, and festivals as they pass.
If you start setting aside money for such expenses immediately, you won’t have to worry about any financial constraints while making wonderful moments with your child.
#2 Build an emergency fund
While those matching Baby-and-Mummy sweatshirts would undoubtedly slay on Instagram, you might be reluctant to save money for a future emergency that may or may not occur.
But saving for an emergency doesn’t mean sacrificing the comfort of yourself or your little one. While aiming for at least three to six months worth of living expenses is recommended, you shouldn’t feel rushed to achieve this goal.
Instead, committing to a gradual yet steady approach would be best. Be consistent about putting any spare cash away at the end of each month, and by the time your child is over two years old, you should have established a solid emergency fund as well.
#3 Update Your Insurance
The cost of living rises as your family grows, and that’s why saving up for a baby is so important. After all, your kid will need you for the next two decades, give or take.
Therefore, ensuring that you have the resources to fulfill these demands is crucial. Obviously, working and earning an income is a reliable means to achieve this, but what happens if you or your spouse loses the ability to do so due to an accident or illness?
This leads us to insurance and its vital role in securing the future of new parents and their families.
Get in touch with your financial advisor to add your child in addition to your life insurance policy if you already have one. Moreover, make sure you are adequately covered against the financial risks relevant to your situation. If there are any gaps in your security, make sure to patch them and update your protection.
If you do not currently have insurance, now is a good opportunity to establish a portfolio. A great option to start is with family-oriented plans, as they typically include perks that new parents might not realize they need.
You may also want to consider term life insurance as an alternative, which is far more affordable and may provide the same level of coverage. However, there is no cash value returned with this type of insurance. Talk to a professional financial advisor if you need assistance determining whether your chosen option best suits your circumstances.
Related to this topic:
4 Types of Insurance You Cant Afford to Put Off While You’re Young
#4 Get a head start on your college fund now
Tertiary education is one of the most expensive aspects of raising a family. You will have around 16–18 years to prepare for this, unless your children are born geniuses.
Please don’t put it off, thinking that everything will work out the following day. And that, my friend, is a guaranteed recipe for more worries.
Instead, start saving early so you can give your child the freedom to choose their course once the college enrollment time comes. While the schools here are undoubtedly good, wouldn’t you give your child the opportunity to study abroad, where they can take in academic information, cultural insights, and practical skills?
Singapore’s government provides substantial funding for universities, so you may rest assured that education won’t cost a fortune. If you play your cards well, this further improves your odds of coming out ahead, which you may use as you like.
Investing in your savings is a smart way to prepare for the high cost of college tuition. Get started saving and investing right away with a plan like Great Life Eastern’s Great Flexi Goal that helps protect your future aspirations and those of your children.
No spare cash? You may want to invest your CPF money. When the time comes for your kid to go to college, you can sign them up for a CPF Education Loan Scheme sponsorship (but this is only applicable to local learning institutes only).
#5 Make a Will
Having to part ways is the last thing on your mind while you’re gazing in awe at your sleeping baby angel.
Making a will, however, is neither morbid nor ominous; instead, it is one of the last acts of love you may accomplish for your loved ones.
If you die intestate (without leaving a will), your possessions will be distributed according to the state’s regulations, which may be at odds with your own personal preferences. It’s possible that minor children will be abandoned and have no one to turn to for protection.
Having your children taken care of after your death can be as easy as drawing up a will (you can start with an internet form). Consequently, you can (and should) select a legal guardian in addition to leaving instructions for the distribution of your assets. Because of this, both your child and you as their guardian will be safe from legal repercussions.