If you’re expecting a child, congratulations! It’s both an exciting and wonderful time. With that said, it does entail adapting to an entirely new lifestyle. Consequently, if you do some financial planning now,you’ll be able to manage your money better during this transformation. If you don’t have a game plan for bringing up baby—and many first-time parents don’t —It’d be easy to let your finances spiral out of control. But there’s no need to fret. Here we have provided our top financial tips for soon-to -be parents below.
1) Choose a legal guardian for your children and write a will.
It’s crucial to name a guardian for your children in case something happens to you and your partner, preferably in your will. That way there is no ambiguity about who should raise them. If you don’t have a Will, now is the time to create one..
This will allow you to have power over how your assets are going to be divided and used in order to help your children later on. Also, choose someone who you want to appoint as the executor of your Will. This person would then need to take care of any remaining details, pay bills and expenses, and make certain that everything noted in the Will is transferred over correctly those named individuals.
2) Put protections in place
No parent is too busy to plan for their child’s future, and there are many ways to do so – such as getting life insurance, adding them to your health insurance, or taking out income protection.
If you want to maintain your family’s current lifestyle in the event of your death or incapacitation, it’s crucial to consider what they will need and how best to provide for that. Many people underestimate how important it is to insure a stay-at-home spouse or lower income earner. The passing of a parent can cause massive changes in childcare and other areas of daily life, resulting in great financial strife and emotional turmoil for the surviving spouse.
A life insurance policy can be a safety net for your loved ones in the event of your death, ensuring that they are taken care of financially. Without a Section 72 Life Insurance Policy, however, life insurance benefits may be subject to inheritance tax as part of the total value of assets received by beneficiaries. Speak with a financial planner to learn about all the options available to you and make the best decision for yourself and your family.
3) It’s never too early to start saving up for your child’s future education.
It’s never too early to start saving up for your kid’s college funds. By setting up a Regular Saver Account and putting away a set amount each month, you can ease the future burden. You could even start with the children’s allowance!
The small Gift allowance of €3,000 can help reduce or avoid the fee for Gift Tax. Parents are allowed to gift up to €3,000 tax-free within any 12-month period per child. If you’re looking long-term, such as saving for college fees, then some good options to consider are stock markets and investment funds.
Although there’s always a certain amount of financial risk that comes with these types of investments, remember to do your research before taking the plunge. This will help you understand how much risk you’re willing to take on and if this option is truly viable for you. Additionally, speaking with professional Financial Planner can give valuable insights and peace of mind.
4) Create a monthly budget plan
A new baby comes with a lot of changes–financially speaking. To adjust, start by taking inventory of your monthly budget. Make note of all income, expenditure and savings each month. Doing this could help you find places where you’re needlessly spending money instead of saving it.
A good budgeting rule of thumb, especially if you’re new to budgeting, is 50/20/30:
50% of your income should go towards necessities such as your mortgage, bills, and food. Then 20% should be saved for retirement contributions (including any debt payments) which come with valuable tax relief benefits. Lastly, 30% can be spent however you want on things that bring joy or improve your life in some way.
When making a list and buying for a baby, keep in mind that some of the more expensive items can be sourced secondhand or by asking friends and family to pool their money. When family and friends ask what you want for your birthday or Christmas, tell them gift cards to restaurants, theaters, or movie theaters. In this way, you can have date nights with your partner after the baby worry-free. And of course, you’ll need help from family and friends for babysitting too.
5) Create an emergency fund for financial security
Save up each month for unanticipated costs. This will come in handy if you have to take considerable time off from work for parental leave. Also, think about getting income protection in case you’re unable to work because of illness or injury.
Ideally, you should have three to six months’ worth of expenses saved up in your emergency fund. This will depend on factors such as your lifestyle, monthly costs, income and dependents. A good rule of thumb is to put away €100 per month or 10% from each pay cheque until you reach your goal. Once achieved, you can stop contributing but review the fund regularly in case there are increases in living costs or other financial obligation changes.
6) Transparency about your finances is key to a healthy relationship.
Discuss your financial goals with your partner and make decisions together to mitigate relationship-destructive money stress, which is especially rampant among parents. It’s always better (and will save you a lot of headache) if you’re on the same page from the start. You may want to consider some of the following things when talking about finances:
- What are our short-term and long-term financial goals?
- Do we want to put away for emergency savings, future travel plans, a new car fund, etc.?
- What are we doing to ensure a comfortable retirement?
It’s common for parents to want to give their children the world, but it’s just as important not to lose focus of your money goals in the process. Having a baby brings along many additional expenses that can make it easy to forget about saving for retirement. Avoid making the mistake that other parents have made by putting their child’s needs over their own when it comes regarding finances. Instead, remember that you cannot pour from an empty cup– meaning taking care of yourself should be priority number one.
If you want your kids to grow up and be financially responsible adults, it’s important to set a good example for them now.
Fortunately, there are many ways to do this. It’s always useful to do your research in advance, so that you know what government benefits and financial discounts you’re entitled to before your baby is born. employee benefits should also be taken into consideration. By doing this, it will help take some of the pressure off finances-wise and give allow you to save money long term more effectively.
7) Ask an expert
If you’re looking to get your finances in order, it’s a good idea to speak with a qualified financial adviser. They can help you understand your needs, plan ahead and become more financially secure.Plus, they can save you money and time by shopping around on your behalf.
They’ll also be able to help you understand the risks involved in certain financial products and recommend the most suitable products for your needs. Finally, they’ll regularly review with you how your financial circumstances and goals change (as well as the market).