The decision to start a family can be a
life altering one. It is quite an exciting idea to grow a family beyond the
count of two and couples are barely able to think of anything else at the time.
But there is another important aspect of starting a family that often takes a
back seat in such times. It is the all essential financial planning.
But financial planning goes way beyond
reviewing your investment portfolio and there are other financial scenarios
that need to be given their fair share of thought.
Get
a Will and Related Document
The last thought that you may want to
have at this time is what would happen to your future family if you were not
around. But no matter how unnecessary this thought may seem at the moment it is
a step that you ought to take for the greater financial security of your
family.
You should protect your interests as
well as that of your loved ones by drafting a Will. You can hire the services
of a solicitor to draft a Will but there are other inexpensive options such as
making the use of a free Will kit which can be easily found by an
internet search. You may also want to put other crucial documents in place such
as the health insurance and lasting power of attorney.
A
Different Budget
It would be an understatement to say
that every aspect of life changes when couples become parents. You can expect
changes in your medical expenses, employment status, childcare, living expenses
and possibly housing expenses too.
A new budget that makes space for these
new changes will help you to approximate your cash flows and be better prepared
for unforeseen expenses that often seem to appear out of nowhere. Creating such
a budget will put you in a better position to predict the future lifestyle of
your family.
Life
Insurance
A major financial decision that most
young parents often get wrong is the one concerning Life Insurance. People
certainly do not wait until they reach their peak earning years to start a
family. It is mostly because they underplay the possibility of having to live
without a steady income source and how the family will cope in such times. A
life insurance can come in handy at such times as it can replace the income
that is required to maintain the lifestyle of a family, provide for the child’s
education and pay down mortgages and debts.
It can be a good time to meet with an
insurance specialist to discuss which type of policy would be best suited to
your circumstances. Even if one of you decides to be a stay at home parent,
there should be an appropriate life insurance policy that covers both
parents.
If some unexpected tragedy strikes the
family the working parent may have to pay for childcare, cut down on working
hours or find a job that gives him or her some additional time to spend with
his or her children.
Come
up with a Savings Plan
If you haven’t given investing and
saving much thought until now, it can be a good idea to think of them as your
priorities henceforth. It goes without saying that a baby will alter your
priorities and spending habits and sticking to a savings plan will help you
cope with the newfound expenses that you will discover as part of your
parenthood.
Even if you are not able to contribute
significantly towards your savings on a periodic basis, you should make it a
point to contribute as much as you can with the vision of making it a regular
habit.
Also you shouldn’t worry about which
investment vehicle you should make use of to secure the family’s future. There
is a lot that you can earn along the way and once you get into the habit of
saving you will have a good enough amount saved before you even know it. You
can then explore the various options that the financial market has to offer to
protect your own and also your family’s future. Putting in place an emergency
fund can also be a wise thing to do before bringing children into the family
portrait.
By taking the necessary financial steps before
you start a family, you can lift off the financial stress that it brings along,
leaving you with just the joys of parenthood to enjoy.