Why Financial and Family Planning Should Always Go Hand In Hand
It is said that you never know true happiness if you are not a parent. One of the most beautiful experiences in life is to hold your bundle of joy for the first time in your hands. It is an experience that most of us crave for, which becomes the highlight of our lives. However, the birth of your child is an even bigger commitment than marriage and it is the most precious investment on can make.
In a city like Singapore, the survival of human species is just as dependent on financial planning as it is on family planning. Rushing the birth of that cute little poop machine you always dreamed of can lead to a lot of financial liabilities that could be a lot harder to wipe clean. From diapers to daycare, and toys to tiny clothes, babies take up a lot of your finances one seemingly harmless bit at a time in the long run.
For those of you who already have a baby, you might relate to this and for those who are yet to experience this bliss, here are some life-saving tips to consider.
- Secured Employment
This is the most obvious thing. It is common sense really. A lot of people do odd jobs and their income fluctuates every month. That might be cool when you are a young bachelor, but when you have a baby who is completely dependent on you, it is not the best option.
Having a baby is expensive; hence, a steady income is advisable to fulfill the basic necessities – food, clothing and shelter – and more importantly – for the child’s medical expenses. Thus, before having a baby, at least one of the parents should have a stable job to lean on.
- Wipe Your Debt Slate Clean
A baby comes into this world carrying a lot of expenses. Actually, even when the baby is not born yet, its expenses begin. Thus, if you actively start clearing off your debts, especially the higher ones, it would be great because once the baby arrives; you will always need to be ready for unforeseen expenses.
If you’re carrying a S$5000 credit card balance at 15%, you could be blowing up to S$790 in interest payments over one year and 11 months, if you are just paying the 5% minimum payment. If you choose to pay S$500 a month, it will still take you 11 months and S$375 in interest to clear you credit card debt. The sooner you clear your credit card debt, the sooner you’ll be able to start saving real money.
- Upgrade Your Living Budget
If you already have a budget, great – all you need to do is adjust it according to the requirements of the child. If you do not, never mind – this is a great time to make one.
One needs to include the things required by the little one in the budget like groceries, baby formula, diapers, childcare expenses, and medical costs.
You might be making some unnecessary expenses (no, a pool table is not a must) which you will have to eliminate completely so that you can make more pragmatic decisions with your savings.
- Get Additional Insurance Coverage
If you already have insurance coverage, then you will need to update it and extend it to include your child. If you do not, this is the perfect time to get one. It is extremely important to get life insurance coverage not just for the primary source of the income earner but for both the parents and the child.
Heaven forbid, should something happen to you, you need to make sure that your family will be able to survive even long after you’re gone.
- Establish an Emergency Fund
The sound of an emergency might be a bit daunting because you already are going through a lot of expenses for the baby and also on you debts and everything but not having an emergency will put you at great risk.
So, as soon as you decide to have a baby, start working on an emergency fund as well, among other things. Put the fund accumulated in a high interest savings account or even a fixed deposit account.
- Set Up a College Education Fund
With an average inflation of 5% in education fees, tertiary education has become so expensive now, it will inevitably balloon into an exorbitant amount when your child turns 18. When you have given birth, paying for their education is a given. If you can even fund 30%-50% of their college education, you could be saving them from a lifetime of condemnation due to college loan debt.
The sooner you start saving for their higher education, the better – ideally as soon as you decide to have a baby so that you do not have to go through a lot of financial pressure later on.
We live in a very expensive world today and raising a child is no child’s play. Hence, by keeping in mind the financial aspect of raising a child and taking care of it, half the battle is won.