Having a child is the most exciting, rewarding, exhausting, and terrifying adventure you’ll ever go on in your whole life. You can read all the self-help books you like, but nothing can ever prepare you for the day when you hold a brand new life in your arms, and know that your own life will never be the same again. You have an incredible responsibility to protect, care for, and nurture this defenseless infant until its old enough to stand on its own two feet – and even then, that protective urge will never leave you.
In addition to all the other qualities we’ve mentioned above, though, there’s one more thing that having a child is – expensive. The financial impact of having a new mouth to feed cannot be overstated. Many of us live hand to mouth, and the majority of us would be on the brink of financial disaster if we went two or three months without receiving a paycheck. That makes trying to plan for the future hard. If all your money goes on feeding, housing, and clothing yourself and your baby, how can you start to put together a nest egg for their future? How do you know what to prioritize, and what to put to one side until your affordability improves?
There are three main things we believe that all parents should do for their children financially – and one of them has more to do with you than your baby. Read on, and we’ll explain in detail why these three things matter, and why you should do something about acquiring them if you haven’t done so already.
- A Savings Account
For “savings account,” you can also read “trust fund.” Although some people like to separate the two, in truth, they both represent the same thing – putting money aside to help your child pay for their future. When a baby is born, you have no idea what their life and career prospects will turn out to be. You might have grand dreams about them heading off to college, but they might turn out to have better practical skills than academic ones. You might be planning for them to follow you into the family business, but they might have dreams of being an artist, or a writer, or going into science. That’s their choice to make, and that’s why it’s not a good idea to earmark funds solely for one purpose.
Saving isn’t easy when finances are tight, but as little as $10 a month as a starting point is enough to start building a lump sum. Even if it stays at $10 a month, that’s over two thousand dollars by the time they’re 18 – enough for them to do something useful with as they approach adulthood. You can do a little better than that though, by paying money into a savings account which has an interest. That way, you’ll earn a little extra money on top of whatever you’re paying in.
Some people see ‘interest rate’ and ‘savings account’ and get cold feet because they don’t trust banks or interest rates, and they view accounts like these as if they were gambling. We understand that – it’s true that the amount of interest you receive each month or year can vary, so you can never be sure what you’re going to get. It can feel a little like playing online slots, where you’re paying in money and hoping to see a return, but can’t guarantee it. Using a savings account isn’t as fun or entertaining as playing popular slot game like Fluffy Favourites online slots, but nor is it as risky. If you don’t spin a winner playing slots, you lose everything you’ve paid in. If an interest rate drops, or a savings option fails, so long as you’ve chosen the right sort of account, then the worst that will happen with a savings account is you’ll be left with whatever you’ve paid in over the years. That has to be better than nothing.
- Life Insurance
Nobody likes to think about dying, and especially not when we’ve just had a baby. Your child is going to be dependant on you for a long time – dying simply isn’t an option! The sad truth, though, is that all of us are going to die one day, and none of us can be sure when it’s going to happen. The fact that we try not to think about death means that too few of us are preparing for it – and that means we’re failing our children. Statistics indicate that over a third of parents don’t have any life insurance at all, and of those who do, half have inadequate cover.
Here’s the harsh reality – you could be hit by a speeding car tomorrow, and there would be nothing you could do to stop it happening. That’s why you need to make sure you’re protected. No amount of money can make up for the loss of a parent, but it at least means that your child’s future is financially secure even if you’re not around to see it. If you’re in good health, you might be surprised how much cover you can obtain four around $10 per month. Speak to an insurance broker and have an assessment of your circumstances performed.
- A Pension
This isn’t for your child – this is for you. When we think about our children being financially dependant on us, we think about their childhood years. We think about the time in their life when they’re too young to work, and have no means of supporting themselves. Those are the priority years when it comes to financial care, but they’re not the only years in which you may find yourself financially supporting your offspring.
Things go wrong in life. Children grow up, move out, get married, get divorced, and end up back at home and in debt. We end up feeling obliged to support them financially, but by then, we may be retired and therefore struggling to assist. That isn’t good – especially when apparently 25% of parents are helping their adult children pay their rent each month. If you’re going to put yourself in a position to help, you need the means to do so. That means you need a secure retirement plan for yourself, and a source of income which will continue to pay out long after you’ve stopped going to work. Find a pensions adviser in your local area and speak to them about options. They may be able to assist with your life insurance, too.
There are obviously other financial considerations to take into account when welcoming a new baby into your home, but if you can cover the three essential bases we’ve outlined above, you’re giving yourself and your child the best possible chance of financial security.
To read more on topics like this, check out the lifestyle category.
