Having children is the beginning of an exciting journey and a great responsibility. As a parent, you must educate your children and meet their needs. Here are a few tips to help you prepare for the economic changes that are about to happen. Check this out for tips financial planning for new parents bellow!
1. Replan new financial goals
After your child’s birth, you naturally think of many things to support his future. For this reason, it is necessary to formulate new financial goals that can be determined over time. For example, it is essential to prepare the cost of vaccines and visit the doctor, so it is necessary to prepare medical insurance. In the meantime, medium-term plans are used for financial purposes that have a span of 2-5 years, e.g., vacation expenses.
Long-term financial goals you can plan, such as the preparation of education insurance, pension schemes, etc. It is well known that inflation in the cost of education is relatively high, so it is necessary to provide education funds from an early age. These plans can catalyze you to manage your finances more wisely and focus on achieving your family’s financial goals.
2. Save and pay off debts before the child is born
This is highly recommended as the costs increase after your child is born. If you don’t have any savings, consider saving money from when your child is born. The nine months leading up to the birth can be the right time to put the brakes on spending to save more money. Even better, you can pay off your debt. So when a child is born, spending can only focus on the family’s needs. Saving can serve as an emergency fund, especially for unexpected expenses.
3. Make a monthly expense list
This list of expenses will grow later each month as the baby grows older. They should also set up funds for vaccines, buying infant formula, groceries, and other supplies. To avoid overspending, you can start by charting a monthly spending plan organized by a priority scale. Prioritize spending on what you need, not what you want (the needs vs. the wants).
Create a simulation with tables for each expense (such as diaper and babysitting costs) to calculate monthly payments. Remember to keep evaluating the budget and update the budget at least once a month. The goal is for you to track which expenses are the biggest. Here’s how you can strategize to reduce those expenses that you can succeed at manage your financial planning for new parents.
4. Prioritizing Contingency Funds
An emergency fund is a set of funds used to deal with various unexpected circumstances in life. This means that you only use these funds for emergencies that usually cannot be dealt with (on a fixed budget). According to the Huffington Post, we should have at least six months of living expenses in a particular savings account that can be used for emergencies. If one of your income streams is interrupted or reduced, this emergency fund can support your family until it has an opportunity to meet the loss or adjust your lifestyle.
5. Adding a revenue stream
When income is insufficient, saving expenses and increasing household income are two steps to supplementing your family’s income fund. There are several ways to improve your revenue stream, including:
- Adding a source of income by using hobbies that generate income, such as cooking, crafting, graphic design, and so on
- Consider whether our motorized vehicles (motorcycles and cars) cost more than using public transport. It can also replace the vehicle at a lower price.
- Get rid of unnecessary monthly subscriptions, like unused streaming services or gym memberships.
- Sell baby items that are no longer used.
6. Compulsory health insurance for wives
You or your partner going to give birth must be registered with the health insurance company. This preparation should be done from the beginning of marriage because the birth process costs a lot of money. Not to mention whether you need to have a cesarean section. Pregnant women must also undergo regular medical examinations before the date of delivery. At least once a month. If you already have health insurance, don’t worry about the costs because there are many health insurance companies. In addition to the childbirth costs, it also covers the costs of visiting a doctor before and after the birth. So this is one of the most important thing at financial planning for new parents.
7. Plan education costs as early as possible
Educational insurance doesn’t just start when your child grows up. It would be better to start with the birth of the new child, at least under one year old. The goal is that the insurance premium rates are lower than if you just started when your child was six years old. In addition, children from the most basic level of education are covered. After all, the cost of education must increase at least 15% per year from year to year due to inflation. Education insurance can be a solution as it is equivalent to an investment. In addition, many educational insurance policies have become life insurance so that they can make your life more peaceful.
The arrival of children is a happy moment for every couple. However, this often makes both parents too excited, and they need to remember to manage financial planning for new parents properly. Come, and start planning your family’s finances right now so that your family’s needs can be adequately met.