It is always exciting to have a baby and, as the adage goes, nothing can quite prepare you for the changes this will bring into your life. However, you can sort out your finances in order not to get any unwanted surprises.
The first thing to consider is if there will be any changes to the family income, especially if any of the partners decides to stop working to look after the baby. This drop-in income will come at a time when more money is needed to cater for the new family member!
It is therefore important to start a new budget which takes into consideration the new circumstances. Since it might be difficult to know all the expenses involved, it might be ideal to get some advice from family and friends who have previous experience on what is exactly involved. These expenses might typically include nappies, baby food, nursery equipment and medical fees. You should always priorities on these items and focus only on the things you really need and afford.
It is important not to get blinded by commercials and adverts of new shiny baby gadgets and clothing. Most of these will only be used for a couple of months and children grow fast! To keep costs under control, you can look for second-hand items which family members may have used and may lend you.
There are also a number of government incentives which may vary depending on your income. These may include children allowance, tax break for working parents and other non-monetary assistance such as maternity leave. You should consult your employer and social security department to check if you are entitled for any benefits.
When choosing a suitable savings plan for your child, the same considerations apply as for adult savers. It is important that you start thinking early about saving for your child as the sooner you start, the more time your money will have to grow. This can be done through various products available from banks and insurance.
Many banks offer products which change with your children’s development in the form of traditional bank accounts. Starting from their first days until their first part-time jobs, these accounts would usually provide better interest rates and benefits. These would also be ideal when teaching your children how to save and spend.
You can also opt for a child plan or life policy which can be used for child’s savings. These may offer a better return over a number of years whilst offering a guarantee for your capital. Such plans may however be less flexible and subject to a number of terms and conditions – you need to refer to the product brochure before you commit your signature. Such products would typically have a life time of 18 to 24 years and start upon the birth of the child. The money can then be used for education or maybe to get your child’s first car!