If you have a new baby, chances are there is more keeping you awake at night than your newborn crying. Having a new addition to the family comes with a lot of additional responsibilities. Even though having a new baby in your family is an extremely happy event, it can mean a greater financial burden for the family. In a country like Singapore, parenting can be rather expensive. To many, becoming a parent pushes them to think about the financial issues they may not have focused on in the past. If you are a new parent, here are some tips for your financial well-being.
1) Identify your financial goals
Many people find that their goals change dramatically once they become parents. It is important to discuss your financial goals with your spouse. Establish a regular timetable for you to hit your financial goals. Make sure that you prioritise your competing goals. Many parents are torn between saving for education, retirement planning, saving for a downpayment for a property or building an investment portfolio. Learn to prioritise these goals and set them in order of importance. Our wants may be infinite but our time and money are not.
2) Set a budget and track your spending
Making a realistic budget based on you and your spouse’s income will go a long way to alleviating financial stress in the future. This budget should reflect your new lifestyle and track your spending. If your housing and other costs have increased owing to your growing family size, make a new monthly budget that reflects those added expenses. Successful budgeting takes time. If you find that you cannot stick to your budget after the first few tries, do not give up. It takes approximately three to six months to get familiar with budgeting. Having your expenses recorded will also help you analyse whether your money is going towards the things you really care about. It also helps you to determine which particular expense is draining your budget and you can zoom in on trying to reduce that particular expense.
3) Life insurance and saving plans
The first time you are separated from your newborn, whether it’s for a few minutes, hours, or days, you may begin to wonder what would happen if you were no longer around to protect him or her. There are many life insurance options available varying from term life to cash value policies. While each individual situation is different, young parents on a budget may consider an affordable term life insurance policy that offers a set death benefit amount sufficient to cover their family’s financial needs. Remember, one of the most important aspects of life insurance is to make sure that if an unexpected event befalls you, your spouse and children can have adequate money such that their way of life will not be disrupted too significantly.
4) Retirement planning
With all of the newborn expenses adding up, it can be challenging to stay the course with your current financial and investment plan. It is common for parents to focus their finances on their children at the expense of their own retirement savings. We advise that the best way to take care of your child is to take care of yourself. Your children are counting on you to be there for the long run. Show your kids how you prepare and save for the future. We encourage parents to be great financial role models for their children. The sooner you start, the sooner you and your family may achieve retirement readiness.