By Charmel Flemming CA (SA)
July is National Savings Month, a perfect time for expecting and new parents to review and plan their finances as they prepare to grow their families. Financial planning, often considered taboo to discuss in many households openly, is crucial in ensuring a secure future for your little ones. Here are some actionable steps to help you get started.
Prepping: Assessing and Communicating
Starting or expanding a family is a journey filled with joy and excitement. However, it also comes with financial responsibilities. With proper planning, these added expenses can be managed, easing stress and allowing you to embrace the joy of this new chapter fully.
- Assess Your Financial Status
Begin by evaluating your current financial situation. This includes reviewing your income, savings, debts, and monthly expenses. Creating a detailed budget helps you understand where your money
is going and where adjustments can be made.
- Open Communication with Your Partner
Discussing finances with your partner is vital. Set aside time to talk about your financial goals and priorities. Whether saving for an emergency fund, your child’s education, or retirement, having these conversations early on can help you align your goals and make informed decisions.
Planning: Setting Goals and Budgeting
- Short-term and Long-term Financial Goals
Establish both short-term and long-term financial goals. Short-term goals include creating an emergency fund and budgeting for immediate expenses like childcare and medical costs. Long-term goals include saving for your child’s education and building a retirement fund.
- Budgeting for New Expenses
Children bring additional costs like diapers, clothing, childcare, and healthcare. Create a budget that accounts for these extra expenses. Consider opening a separate savings account specifically for child-related costs to keep track of your spending more efficiently.
Growing: Increasing Savings and Investing Wisely
- Strategies for Increasing Savings
Automate your savings by setting up automatic transfers to a dedicated savings account. Setting up automatic transfers to a dedicated savings account ensures you consistently save a portion of your income.
Review your expenses to identify areas where you can cut unnecessary spending, freeing up more money to save.
- Basic Investment Options
Consider simple investment options that can help grow your savings. A high-yield savings account, unit trusts, or tax-free savings accounts are good places to start. Investing early can significantly
benefit from compound interest, providing a more substantial financial cushion for your family’s future.
Practical Financial Tips for Parents
Start Early: The sooner you save and plan, the better. Even small amounts saved regularly can grow significantly. This early start can give you a head start and boost your confidence in your financial planning journey.
Start Small: Self-contained investment apps or banking apps are excellent starting points. Begin with what you have, and as your investments and knowledge grow, you can explore more advanced investment opportunities.
Use Financial Tools: Use budgeting apps and tools to keep track of your expenses and savings goals.
Seek Professional Advice: Consult a financial advisor to help create a
comprehensive financial plan tailored to your family’s needs.
Plan for Emergencies: Life is unpredictable. Ensure you have an emergency fund to cover unexpected expenses without derailing your financial plan.
Preparing for a growing family involves careful financial planning and open communication. By assessing your current financial status, setting clear goals, and making strategic savings and investment decisions, you can ensure a secure and prosperous future for your children. Remember, every small step you take today can make a big difference in the long run. Embrace National Savings Month to build a financially stable foundation for your family’s future.
About the Author: Charmel Flemming, CA(SA), is a mother of two girls, ages 8 and 10, a chartered accountant, and the founder and CEO of F Twelve, a cloud-based accounting and management solutions firm. She is also a Non-Executive Director on several boards. Known for her integrity, big-picture thinking, and entrepreneurial spirit, Charmel leverages her extensive corporate experience to drive innovation and progress, with a strong passion for supporting local businesses. She enjoys teaching her children the value of money and fostering healthy money habits, encouraging them to develop their own relationships with finances.
