Starting a family is an incredibly exciting yet daunting time. The responsibility on your shoulders as a parent is probably unlike anything you’ve experienced before. You need to ensure you’ll provide a safe and loving home environment and give your little one all they need to develop and thrive. All of that relies on a critical foundation of financial stability.
Understanding your financial situation becomes all the more important when you’ve got someone else relying on you. In this article, we explore how you can start to prepare your family finances while you wait for the arrival of your baby.
Track your spending
Start by understanding where your money is currently going (if you don’t already) and if there are any areas in which you can redirect funds for family spending. Transparency over your finances is essential to help you prepare and plan.
You may have to sacrifice some of your non-essential spending to pay for recurring expenses like nappies and baby food or equipment such as a pram or cot.
Create a family budget
With a better understanding of your outgoings, you can start to draw up a family budget. Total all your sources of income and then estimate the outgoings you’re likely to have with your newborn. It’s better to overestimate than underestimate because then you’ll have money spare if you get something slightly wrong.
You should be able to see if you’ll need to supplement your income to maintain financial stability or if you’ll have some funds spare to bolster your financial security. You can tinker with a budget as you go along so don’t worry if it’s not set in stone.
Build your emergency fund
Financial resilience is key for family life. Putting money aside in the form of savings or an emergency fund helps you to ride out life’s little bumps along the way. Whether you need to cover an unexpected bill or pay for childcare, a little money put to one side always helps build stability.
If you’re starting from scratch, just save what you can afford to for now. You’ll hopefully have chances to put more away down the line.
Clear outstanding debts
Paying back money is hard enough to do without a family, so clearing any outstanding debts before your baby arrives is always a good strategy. Tackle high-interest debts first because these cost you more the longer they’re left unpaid.
You’ll be glad down the line because you can keep and use more of your income every month. In times of financial strife, you should be better protected from rising interest rates and hardship too.
Research your entitlements
When you start a family, you should be able to benefit from entitlements provided by the government and your employer. These may not be needed, but it’s good to note that they’re always there if you’re struggling.
