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Guide to preparing for your little one financially

20/06/2018


This article is contributed by Advisors Alliance Group.

 

Getting prepared for the arrival of your little one is never easy. Between getting the baby’s room decorated and shopping for clothes and milk bottles, many parents are too overwhelmed to properly discuss the financial aspects with their spouses. This short guide is here to help you lay out the most important financial tasks to welcome your newborn without financial worries.

 

Photo source: Rise & Shine Facebook

 

 

CHECK YOUR EMPLOYEE BENEFITS

 

Some companies, especially the MNCs, have maternity benefits for their employees. Check with your HR what are the delivery expenses that you can claim from your company insurance plan. As such benefits are not common for local companies, we have seen many parents who have missed out on these as they were not aware.

 

 

PLAN YOUR MATERNITY/ PATERNITY LEAVE

 

How much time you and your spouse can get off work can significantly impact your budgeting for the coming year. You and your spouse should plan early on how many days of leave you wish to take before and after the delivery. Most importantly, make sure you check with your HR on how much paid and unpaid leave you are entitled to. If you decide to take no pay leave, start saving up to cover the expenses during those months.

 

With the recent emphasis on supporting parents, there are many government schemes such as the shared parental leave. Be sure to read up on it and apply early as the applications takes time to be processed. ( www.heybaby.sg )

 

 

DO A BUDGETING EXERCISE

 

It’s important that you have a clear idea on your family’s current financial situation so that you know how much you can spend on your newborn. Babies come with plenty of expenses, so set a limit on both necessary and optional buys (like the high-end stroller and state of the art baby toys). Consider using hand-me-downs from families and friends, as your little ones will outgrow the clothing at a blazing rate.

 

Take an hour off to do a cashflow analysis together with your spouse. Review on your spending habits to understand if you have enough income to support your new expected expenses. Make sure to adjust your spending so that you do not sacrifice your own retirement savings as well. (Download a free sample template to help you get started here)

 

 

INSURE BABY'S FUTURE

 

Get yourself properly insured. Make sure that your spouse and child is well taken care of even when you are unable to earn a living. The typical guideline is to have life insurance 8 to 10 times of your annual income, however this depends on your individual circumstances so speak with a trusted financial advisor. A long term disability insurance is highly recommended as death is not the only instance that will prevent us from earning an income for our family.

 

Another aspect to look into is maternity insurance. Increasingly, due to the stress and risk factors of our modern society, congenital illnesses and pregnancy complications are getting common. Make sure you and your child are covered against such mishap. At AAG, our maternity plan can be purchased even before the baby is born to guarantee your little ones will be covered against early stage critical illnesses and children critical illnesses.

 

 

MAKE A WILL

 

Figure out who would be your child’s guardian if you and your partner weren’t around. This may be the trickiest part of making a will and couples often argue about it. Keep in mind that the responsibilities can — and probably should —be split between a few different people. Choose one set of people to actually care for your child, and another to care for his finances in the event of your death.

 

Instead of making your child a beneficiary of your insurance, set up a trust that can funnel the money to the child. This helps to ensure that it will be spent in the best possible way.

 

Don’t forget other key documents. You may also want to do up your lasting power of attorney that address some other what-ifs that could potentially come up in your future.

 

 

CONSIDER A UNIVERSITY FUND

 

University is expensive, but you can make it more manageable by starting to save early. Saving regularly allows you to grow the fund faster through investment tools or endowment plans. Based on local tuition fees, the estimated 4 year course comes up to about $130,000 in 2037 so start planning for it early.

 

Get a free consultation now! Come join us on 21st July at Suntec Convention for SuperMom Pregnancy Seminar- 1st 1,000 Days From Conception and speak with our financial advisors!

 

This guide is sponsored by Advisors Alliance Group. At AAG, our professional advisors will guide you through each of these aspects and come up with an easy to follow strategy to ensure your child’s future is properly addressed. Speak to our consultant after the event to find out more.