How to afford a baby – What you should know

“Young couples should plan ahead financially when thinking about starting a family,” said Dumezulu Shiburi, FNB’s Corporate Communications Manager.

Although there is nothing more exciting than a new baby on the way, it is important to be aware of the financial responsibility that comes along with it. You are no longer a young independent – you’re now someone else’s source of support.

According to Lezanne Human, CEO of FNB Savings, Investments and Fiduciary, “Making the transition to being a new parent can be very intimidating, especially when considering the effect it will have on your finances. A new addition to the family brings with it expected and unexpected expenses – ensure that you save for both. The sooner you start, the sooner you can take advantage of compound interest.”

Here are a few pointers every young couple should consider to make this journey even more joyous:

• Start by planning ahead – It is important to take into account all the different expenses that you might have to deal with. This includes regular doctor’s visits, getting the baby’s room ready, the day you bring your baby home for the first time, and everything else they need until the day they move out to live on their own. Plan for the things you have to save towards and start saving as early as possible.

• Compound interest – The earlier you start, the better. This helps you build your capital. Instead of trying to beat the market, you can use the compounding effect to your advantage. This means you earn interest on interest – the longer you invest, the greater your returns.

• Save accordingly – Especially for school fees, which tend to increase and usually exceed inflation. This will help you cover all relevant costs now and in future.

• Automate your savings – Set up a scheduled transfer into your account which will make it easier to start saving from the moment you receive the good news. This means you can save small amounts regularly instead of having to commit a large lump sum up front.

• Don’t compromise – Plan your finances beforehand and be sure to balance your child’s future expenses with other financial obligations

• Encourage your children to save as well – Teach your children the importance of saving from a young age.

Do you perhaps have more information pertaining to this story? Email us at randfonteinherald@caxton.co.za (remember to include your contact details) or phone us on 011 693 3671.

Also read: 

Plan ahead before starting a family

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