Waiting for the arrival of a new member of the family is an exciting time, but growing your family can put great strain on your finances. Fortunately, according to Anel Coetzee, Financial Planner at Sanlam, if you approach your finances together as parents and consider them carefully, such difficulties can be avoided. The key is to take control of your financial future and call in the help of a professional.
1. Lifestyle aspirations and drawing up a financial plan
A key part of any committed parent’s financial life is having a financial plan that covers short- and long-term goals. A financial planner can help you prioritise your goals and create a plan to reach those goals. It’s a good idea to have a discussion with your partner before your meeting with the financial planner, covering the kind of lifestyle you would like to live as well as saving for emergencies, retirement, children’s education, and deposits for big purchases. You should also discuss how to prepare for unforeseen events in the family like death, illness, disability and unemployment.
As parents it’s important to align your future aspirations because the amounts you need to reach your goals are dependent on these, says Anel.
2. Budget for monthly savings, spending and donations as a family
Budgeting is an essential tool to understand where one intends to spend money and how much, and for tracking past spending. Make time to review your budget regularly to ensure you are spending as planned, but also to plan ahead for additional future expenses, e.g. childcare when your child is born or additional money for future studies.
3. Formalise finances in your family to allow for unforeseen events
A will is an important legal document that can help you manage the distribution of assets or debt in the event of death. It can also give you peace of mind, knowing that your children will be with the guardians of your choice should something happen. Your financial planner, working together with a legal advisor, can help you decide the best route to plan your estate.
Ensuring proper cover for unforeseen events such as death, disability and severe illness is in place, can help provide for your family, settle debt and pay for additional medical expenses. It can also protect your biggest asset, namely your ability to earn an income.
4. Have a financial plan as parents
A good financial plan, says Anel, can help keep your financial journey as parents on track and should include:
- Clear and frequent communication with your financial planner to maintain and update the plan, as well as with all other stakeholders you want to involve, like your partner and children
- Following the financial plan and adjusting it as necessary
- Adhering to tax and retirement fund regulations.
A financial planner is your most valued partner in all your financial matters – supporting you in planning your financial journey and adjusting the plan where necessary to ensure you stay on track.
Avoiding a financial mishap, says Anel, is much better than dealing with the consequences afterwards. And usually, all it takes is regular maintenance, like taking one day a year to:
1) Review your will
2) Review your insurance policies
3) Evaluate bank charges and costs
4) Check that your short-term insurance is up to date
5) Review your company benefits
6) Check your medical scheme benefits
7) Making sure your planning for retirement is on track.
Then schedule a meeting with your financial planner to discuss the progress of your financial plan and how it may need to be adjusted.
Anel concludes, “Your responsibility to your family is to be financially prepared and empowered to handle your future together. Work on forging a financial future for your family, with the big picture in mind, and follow the guiding principles of transparency and trust.”
Article credit https://www.expectantmothersguide.co.za/navigating-your-finances-as-parents/