If you?re planning on starting a family in the near or medium-term future, there are a few actions you can take now to reduce future financial stress. Some of the main items on your “to do” list could be:
Calculate your current cash situation.
How much do you have in savings? How much do you owe from a personal debt point of view? (Think credit cards, personal loans and car loans). Working out what your current situation is will help you to get organised before you experience any life-changing events.
Work out what you spend your money on
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 download your bank statements and go through that very painful process now.
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 mortgage, 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 in Australia is more than 16%, based on CANSTAR?s analysis, 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). Want to know how much interest we potentially pay our financial institutions? Click here to find out.
Manage maternity/paternity leave
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.
Once you know how much you will need to save, you can start saving it!
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 overwhelming, I know, 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.