Starting a family is magical and life-changing – but it’s also expensive! Here’s a quick guide to putting in place a $$ plan for your next stage of life:
Work out your current cash situation. How much do you have in savings? How much do you owe on credit cards (or any other form of debt)? The sooner you can do this before your bundle of joy arrives and your combined income drops, the better!
Look at your spending habits. You may think you know what you spend your money on, but unless you have been through twelve months’ worth of bank statements, line by line, chances are you don’t! So do that very painful process now and work out exactly where your money goes.
Do a written budget. Once you know how much you actually do spend, you should be able to work out which of those costs are necessary (for example, a home loan, petrol, insurances) and which ones could be trimmed back. Do a written budget to give yourself a fantastic spending guideline for the future.
Make a plan to pay off any personal debt before your baby arrives. The average interest rate on standard credit cards is in the double figures, (check our latest report here so if you owe money on credit then you are probably shelling out a fortune for the privilege. Finances will be much tighter after your baby arrives and it will be a big help to you if you’re not relying on credit (or wasting money on interest).
Work out how much maternity/paternity leave you want to take – and therefore how much you will need to save in order to make that happen. Once you have a written budget, you know how much income your household needs each month to get by. So look at your monthly costs, MINUS your partner’s monthly income, any government benefits and any income that you will continue to earn. THAT is how much you will need to have put aside for each month that you intend to not work.
Start saving! Once you know how much you will need to save, you can start saving it! Check out savings account options here.
Do a will. It’s vitally important that you put in writing your intentions for your future child(ren) in the event that you pass away. Who will be their legal guardian? Who will look after their inheritance until they are adult? Do you want to leave any instructions with regards to their upbringing? Your will is the best and easiest way for you to make these intentions clear.
Review your insurances. Having a small person dependant on you for their health and happiness means that you need to review your insurances. Make sure you have sufficient cover for your life, your own health and your income.
It all sounds quite overwhelming0, but really it’s not. Having your finances in order both before and after you have your beautiful baby will give you great peace of mind.