Having a child is an exciting time in life! Although you may have felt financially ready for your new family member, Covid-19 has likely thrown a spanner in the works. With the emergence of the coronavirus pandemic, your financial circumstances may have suddenly changed. You may have lost your job, or you may have experienced a salary cut. The joy of having a baby can easily be overshadowed by stress as you tally up the costs of raising a child in these uncertain times. However, with a little advanced planning, you can increase your savings and prepare your budget now to make managing your money easier after the baby is born.
The cost of raising a baby
Marlies Kappers, chief marketing officer at a leading financial services provider, says it’s difficult to work out the “average” cost of having a baby because expectant parents’ circumstances and choices differ so much. However, it probably costs more to raise a baby than you’d think.
Budgeting 101 for soon-to-be parents
Every cent counts
Expectant mothers can take maternity leave any time from four weeks before their due date. South African women are entitled to maternity leave, during which time their jobs – or an equivalent job – must be reserved. Employers are not required by law to pay you your full salary during your maternity leave period (or even a portion of your salary). If you are not getting full maternity pay, you can claim from the Unemployment Insurance Fund (UIF). It’s important to note that UIF payment differs from person to person and is often not the full amount you would have drawn from your normal salary. It’s important to work out how much UIF you are entitled to and what your UIF payout should go towards paying.
Shop smartly
Shopping for your new baby is exciting, but it’s better to spread the costs of baby clothing, goodies, and supplies over nine months rather than leaving everything to the last minute. If you buy in one go, you will spend a lot of money at once, and chances are you’ll forget something important or buy things you don’t really need. The hospital usually has a list of the things you and the baby will need. Get the list as early as possible and start buying one item every few weeks.
Get your finances in order
Make an appointment to see a qualified financial adviser, who’ll be able to do a needs analysis and recommend appropriate products and packages that can help you reach your financial goals. Speak to an advisor about life insurance options, drawing up a will, and setting up an education policy. Review your medical aid and find out exactly what is covered in your chosen policy and what is excluded, so you don’t get any surprise bills when your baby is born.
Start saving
A baby may come as a surprise or be planned, but whatever the case, you should start saving as soon as you find out you’re pregnant. Open a bank account, such as a tax-free savings account, and put away as much money as you can afford each month.
Don’t be blinded by the bling
Times are tough with the economy not doing well, so don’t feel pressured to keep up with the Joneses. Don’t go for brand new and shiny cots, car seats and prams as they can be expensive. Rather find good quality second-hand items from online shops that specialise in refurbishing and reselling baby items. Doing some financial planning when you find out you’re pregnant may help to reduce some of the stresses after the baby is borns.
