5 Things to help you get financially ready for starting a family
Last updated on 1st April, 2020 at 05:00 pm
Starting a family is probably one of the most important decisions you’ll make in your life. It will no longer be just you and your spouse, and your lifestyle and priorities will most likely change to accommodate the new bundle of joy. As your children grow up, they will have increasing needs – which can all put a pinch on your pocket. Here are expert tips on what you should know and have in place before taking this important step.
1 Set a strong foundation
Karen Bongers, a product development actuary for Sanlam Individual Life, says that once you start a family, you will need to review you and your partner’s life cover to ensure that your little one will be financially protected in the unfortunate event that one of you (or both) were to die unexpectedly. This is assuming you already have sufficient income protection cover in place.
She adds that a financial planner will be able to help you determine an appropriate amount of cover, aimed at covering general living expenses and child care costs for the foreseeable future – “typically until your child will turn 18 or finish tertiary studies, at which time they should be able to stand on their own feet.”
According to Jaco van Schalkwyk, CFP® Professional at Plan-B BlueStar: “Your planner can also assist you in identifying gaps in your risk planning. There are several solutions to address these risks, for example a gap cover policy, covering the whole family. Children may be hospitalised, and gap cover can assist you where the medical aid pays in short. And if they’re not accredited for your current medical aid, at least put you in contact with a specialist who can help you source the best aid that will suit your needs.”
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2 Plan for when you’re not around
It’s wise to ensure that you take care of your family should you or your partner no longer be there for them, says David Thomson, senior legal adviser at Sanlam Trust. “Contact your financial planner to assist you in documenting your last wishes for those you leave behind,” adds Thomson.
If you already have a will, you should review it to ensure it caters for the latest arrival in the family. Click here to read ‘9 Questions you have about your will, answered’.
3 Consider child-specific risk policies
There are also child-specific risk benefits you can consider, says Bongers. For instance, child-specific illness or injury benefits that provide a lump sum payout if your child were to suffer from any of a number of defined illnesses, injuries, infections or impairments. “Many of these serious events, like cancer, could ruin a family financially if they do not have the necessary financial protection in place,” says Bongers.
4 Consider adding onto your income protection cover
You could also consider certain add-on benefits to your own income protection cover, suggests Bongers. It’s worth looking for cover that would provide an income if you had to take significant amounts of time off work to care for a sick child, for example.
5 Have a budget in place
“For a parent, it should be of utmost importance to ensure that you’re able to cater for all of this, whilst at the same time ensuring a happy and balanced home environment,” says van Schalkwyk. He recommends having a budget planning process in place which caters for:
- All immediate and repeat expenses such as your bond or rental costs, medical aid, rates and taxes, retirement annuities and life policies;
- Fluctuating monthly expenses such as food, transport, entertainment, clothes, education;
- An emergency fund;
- A savings account for longer term needs such as a one-year fixed term savings plan for annual holidays and school fees.
Secure your family’s future today. Get up to 30% discount on risk products, including life insurance, disability cover, income protection and more. Click here to find out more.
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