So you’ve got a new baby on the way… well, congratulations! You’re about to embark on one of the most magical journeys that a human being can go on (despite all the sleepless nights and endless worries!). And although there are many joys and unexpected surprises in store for you, the earlier you start to think about the financial implications this may have on your life, and how best to prepare for this, the better. Being more financially savvy and getting some systems up and running before baby arrives is the best way to go, and we’re here to help you get started with that.
Embracing Financial Change
The first thing to do is to talk to your partner, friends or family about any fears around the financial changes and challenges that await. If you can embrace the fact that you’ll have to shift your priorities soon, as well as the fact that you’re entering into a new phase of adulthood, where you simply aren’t the center of your life anymore, the transition will be a lot easier. Don’t run to the bank and get a loan. Sit tight, consider your situation as a whole, and discuss it with those close to you. The more heads you put together, the more likely the transition will be easier than you thought.
Putting a Budget Together
Start by putting a budget together, detailing your current expenses. In the short term, especially while the baby is still on the way, it makes sense to start putting some money aside each month to help to get used to your increased spending when baby will finally arrive. Talk to your friends about whether they know someone in the financial sector who can help you with your budget (often, a friend of a friend will be in the industry), and work on getting a truthful, actual list of your expenses down. That way, you can look at where you can make some cuts, especially on entertainment spending, for example, to make room for practical purchases like diapers, a cot and more.
Planning Your Employment & Doing Research
If you’re currently employed, it also helps to talk to your employer about your maternity/paternity leave, and to factor into your budget that that pay will likely be less than your usual pay. Don’t run towards getting a credit card to make up for this. Start by doing some research, especially around some social grants that may be available by local governments, or by exploring the different finance options that are at your disposal. If you’re worried about being charged high-interest rates, talk to a friend or family member who may be able to offer you a loan with minimal or non-compound interest. The key thing to remember is not to overwhelm yourself: gather the facts, talk to the people around you, and set up a plan to slowly help you to prepare for your new chapter.
Understanding Your New Expenses
If you’d like to get some additional advice over and above that from a financial advisor, the best place to go is to talk to someone who has already had a baby. If they are earning in a similar bracket to you, they could give you a realistic account of some of the new expenses you can expect, while also talking about their challenges and some of the obstacles you may face along the way. Having a baby is one of the most precious experiences that any person will go through, and there are a lot of amazing moments ahead of you in this process. By taking charge of your financial situation sooner rather than later, you will set a benchmark for financial decision-making once the baby is here, which will benefit you, as well as the entire family.