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Financial advice for new parents

Things to consider to help keep your financial health on track after your child’s birth.

Besides being sleep-deprived and permanently exhausted, new parents can also find themselves worried about finances especially as medical bills and related baby expenses start adding up. To keep your financial health on track in the months following the birth of your child, consider the following:

  1. Medical aid
  2. Register your child as a dependant on your medical aid and gap cover as soon as possible after her birth. Once your child is registered with Home Affairs, provide your medical aid with a copy of her birth certificate to ensure that all ensuing medical care is covered by the medical aid. Check that you and your partner are on the most appropriate medical aid plan. If your newborn baby has any specific medical needs, you may want to consider changing or upgrading plans for the following year. The first few years of your child’s life can be particularly expensive when it comes to medical costs, so think carefully about a plan that meets your families’ needs.

  3. Find a baby clinic near you
  4. Baby clinics are generally run by highly qualified nurses and baby experts who, in addition to providing vaccination services, can provide excellent advice on post-partum care, breast and bottle feeding, colic and reflux relief, home and natural remedies, as well as sleep training. Rather than using your GP or Paediatrician as the first point-of-call, make use of the services offered by your local baby clinic.

  5. Start saving for your child’s education
  6. Start saving for your child’s education as soon as possible. A tax-free savings account (TFSA) is a good vehicle for education savings as you will not pay tax on any growth in, nor on any withdrawals from, the fund. You are able to contribute an amount of R33 000 per year towards a TFSA. It may be advisable to open the TFSA in your own name so as to not detract from your child’s lifetime limit of R500 000. Given the time horizon for your child’s tertiary education, setting up a unit trust portfolio for your child is another great option for her education funding.

  7. Do your research before buying baby gadgets
  8. Avoid the temptation of buying every possible gadget for your baby until you know exactly what it is you need. Chat with other new parents and do your research online before you spend your hard-earned money on baby scheduling timers, bath thermometers, scented nappy bins, self-warming bottles, squirt dispensing baby spoons and food-catching placemats. The basics such as prams, cots and baby clothes, plus a constant supply of nappies for at least the next two years, is going to cost a lot, so avoid wasting money on gadgets you can happily get by without.

  9. Recycle baby goods with other parents
  10. Your newborn baby is going to grow exponentially in the first year and is likely to outgrow some outfits before getting the opportunity to wear them. If you have friends and family with small children, let them know you’re happy to use their pre-loved baby clothes and then pass them on to the next new parent who can benefit from them.

  11. Redraft your budget
  12. Before your baby is born it is difficult to appreciate the costs of having a child. Once your child is a few months old, you will begin to get a feel for your new monthly expenses. This is a great time to prepare an updated household budget taking into account your child’s medical aid expenses, nappies, formula, toiletries, over-the-counter medical expenses, childcare, clothing and other related expenses.

  13. Increase your life cover
  14. Having a child being financially dependent on you necessitates reviewing your life cover so that you can provide adequately for her should something happen to you. Sit with your financial advisor to determine how much life cover you will need to ensure she can be provided for if you are not around.

  15. Amend your beneficiary nominations
  16. While you are with your financial advisor, be sure to check and amend any beneficiary nominations on your policies and investments.

  17. Keep all records
  18. Keep all records pertaining to your new child including the original birth certificate, clinic cards, growth charts, vaccination cards and medical reports as you will definitely need these documents as your baby gets older.

  19. Redraft your Will
  20. With a new dependant, it is advisable to update your Will as soon as possible to make provision for your child. Importantly, consider nominating a legal guardian for your child in the event of your death. You can also consider setting up a testamentary trust in your Will which will house any assets bequeathed to your minor child until she is old enough to take care of herself.

  21. Start investigating daycare and/or childcare costs
  22. If you are not planning to be a stay-at-home parent, start doing your research into the costs of at-home childcare and daycare facilities so that you can budget accordingly. Both options are costly, so you need to determine which type of care is best for your circumstances. It is often difficult to make like-for-like comparisons when pricing daycare facilities as some quote all-inclusive rates, while others quote a basic rate with added costs such as packed meals, nappies, toiletries and aftercare expenses.

  23. Increase your emergency funding
  24. With an extra person in the house, it’s a good idea to increase your emergency funding to account for unforeseeable child-related expenses.

  25. Use your loyalty programmes
  26. If you haven’t already done so, take full advantage of the points and miles from your various loyalty programmes. Use them to your advantage by stocking up on baby supplies, using discounts and converting miles to help fund the additional costs of having a baby.

  27. Make your own baby food
  28. As convenient as ready-made baby meals are, they come at a price. Once your baby starts needing solids, experiment with cooking your baby’s meals from locally produced, organic fruit and vegetables. It’s much easier than you think and way more cost-effective than instant baby meals purchase in-store.

  29. Discuss and agree on your spending priorities
  30. Together with your partner, begin discussing your spending priorities for your new child. How and where would you like her to be educated? What precedent will you set when shopping for birthday and Christmas presents? What are your respective attitudes to spending money on your child? How are you going to begin teaching her the difference between wants and needs? Children can begin grasping basic money concepts from around age 3, so these are important questions to start asking each other.

ADVISOR PROFILE

Devon Card

Crue Invest (Pty) Ltd

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