Financial Planning Tips for Starting a Family
When you plan to start a family with your partner, it is easy to get caught up in all the joy and excitement of it all. You may dream about what your children are going to be like and how many children you want to have.
However, you cannot forget about the financial aspect of starting a family, either. Financial planning should be synonymous with family planning because having the money to support a growing family is vital.
After all, don’t you want your children to have a healthy upbringing without seeing you struggle to put food on the table or pay for their medical expenses?
In Australia, the cost to raise just one child from birth to age 17 can be $297,600.
Even if you send your children to a public school, you will end up spending $66,000 on each of their schooling supplies, clothes, notebooks, pencils, pens and so on.
But if the income in your household is higher, you might spend as much as $475,000 to send your child to private school.
Of course, these are all cost estimates based on surveys conducted by the Australian Scholarships Group and other organisations.
The exact cost to raise your child might vary, but you should still be prepared to spend several thousands of dollars throughout the course of their childhood.
To make this financial burden a little bit easier, below are seven tips to financially prepare for adding one or more children to your family:
1. Life Insurance
Single people don’t care as much about life insurance because it is not going to benefit them much.
But if you have a family with children, then you’ll want to make sure that your family is financially taken care of in case you unexpectedly pass away.
Many life insurance policies are very affordable, too, especially if you are a parent younger than 50.
So, you should consider investing in life insurance to secure your family’s financial future.
2. Health Insurance
If you have a health insurance plan through your employer or independently, make sure you have a family policy that covers you and your spouse.
During a pregnancy, the medical bills can add up rather quickly.
Private Health insurance is considered a must for reducing these medical costs as much as possible.
Then, after your child is born, you will want to add him or her to your private health insurance policy, as well.
Out of all your family planning tasks, creating a budget should be at the top of your list. First, you need to make a list of all your anticipated expenses once you have a child.
You will need to list things like clothes, food, toys, school, childcare, healthcare, rent, transportation and so on. Add up the total expenses for one month.
This will be the minimum amount of income that your household will need to generate.
4. Family and Friends
Many people must lean on family and friends for assistance with their children. You should not be solely dependent on them, but they may be able to help you out at various times.
For instance, your child’s grandparents might be happy to babysit for free. And if your friends have any children, perhaps they can give you some old baby clothes that they don’t need anymore.
These little things can help you save money in the long run.
5. Second-hand stores
Stores, like the Salvo’s and Vinnie’s are a great place to find bargain items for children. Children outgrow clothes and toys quickly, and these items often end up at a thrift store very gently used.
If you are purchasing used clothes, just be sure to wash them first. After that, they will be as good as new.
6. College Savings Accounts
It is never too early to save money for your child’s future college education. Besides, there are many tax advantages to opening a college savings account.
The money that you deposit into the account is a tax write-off. At the same time, you can save money for your child’s college education while it earns interest, too.
Whether you have life insurance or not, you should make a will after your child is born. A lot of parents want to secure their child’s future by leaving them the majority of their assets in case they die. A will is a legal document that ensures that your assets will go to your children.