You’ve stocked up on all the baby gear, and you’re already on the path of the new parenting gig. Now’s the best time to start budgeting and following some clever financial steps to ensure that you have enough to go around now, and in the future.
When a baby is on the way, there is so much to consider, plan for and buy, and you only have nine months to get everything sorted out. Yes, a bit of financial planning should always be on the checklist but this is usually neglected as everything else just seems more important at the time.
And once your baby arrives, your whole world changes. You’re learning how to be a parent and often too busy caring for your little one that putting together a budget spreadsheet falls by the wayside.
However, what most parents don’t realise is that once their bundle of joy arrives, their spending and saving habits need to change completely. Ideally, you should assess your situation, predict your future needs, and make changes before your baby is born. However, it’s not too late to start to get things in order once your baby is born.
Here are some budget and savings tips to help you out:
It sounds so easy, but in practise it’s tough, especially when there are always expenses, and new ones come up. You need to find ways to save that make sense, whether it’s setting up a debit order on your bank account for a savings plan, only eating takeout once a month, only buying clothes on sale, scouring supermarkets for grocery specials, or packing lunch to take to work.
“Having a will, life insurance and medical aid aren’t luxuries.”
The key to changing spending behaviour is by creating a goal, and starting small. Start by switching off lights when they’re not in use, or limiting those impulse buys. If you feel you really need something, rather don’t purchase it, and the next day ask yourself if it’s essential you buy it. Small starts could result in big gains so just start wherever you can.
2. Create a budget
It’s not an exciting task, especially when it creates friction between you and your partner, but by ascertaining your fixed and variable expenses, and scrutinising your bank statements, you’ll be able to see exactly where your money is going. This will then enable you to make a wiser decision when it comes to your money, and may even find that you cancel services or subscriptions you don’t need.
You could also try the 50-20-30 budget method: 50% of your net income should go towards your needs, 30% towards your wants, and 20% to your savings and debt repayments.
3. Protect yourself and your things
Having a will, life insurance and medical aid aren’t luxuries. You might think that because you and your family are generally healthy – or that you don’t have a lot of assets – that you don’t need medical aid or a will. Or you might think that because you’re fairly young, you don’t need life insurance, or that your kids will be provided for by their dad, or your parents. There are many things to consider if something happens to you – your kids’ general well-being, education, first cars, weddings, etc. and you’ll be doing them a huge disservice if you leave them with nothing.
4. Start saving for your child’s university education as soon as possible
Your kids will be financially dependent on you for at least the first 20 years of their lives. It is estimated that parents who send their children to public schools and pay for a three-year university degree will spend on average about R1.2 million per child in today’s financial terms, a figure that doubles if your child goes to a private school.
By putting away for university now, you save your child the burden of paying back university loans, which will affect their own financial wellness as adults.