One of the best life-changing decisions young couples can ever make is deciding to start a family. This instantly means there is going to be a shift in the normal lifestyle of the couples; as they are expected to have more expenses. However, more often than not, couples can get carried away with buying baby supplies and other items, neglecting the important aspects of financial planning.
When starting a family, the first part of the financial aspect to consider is to consider discussing investment portfolios, saving options. This however is just one of the many scope to cover when planning finances for a new family. To help new couples plan, here are five financial steps to consider before you start a family:
Draft Wills and Related Documents
Many will ask we just got married, what do we need a will for? As new parents, thinking of a future where you someday will not be around to provide for the children can be very difficult. Even with this, it is very important to make preparations beforehand. If after marriage, you don’t have wills and related statements, meeting with an attorney has to be done quickly, before the child is born. With this, you are assured that if something were to happen to you or your spouse tomorrow, your child is protected. This also provides other necessary documents like health care insurance, living wills and others. Although no one wants to think of his or her own mortality, by doing so is one of the many responsibilities of parenthood.
Create a New Budget Together
As discussed earlier, when a couple wants to start a Family, all aspects of life will change for the new parent. A new family comes with changes in employment status, increased medical expenses, childcare, probably a new house and other living expenses. To cushion the effect of these changes and also approximate your cash flows, a thoughtful budget is an answer. Though this might be challenging and uncertain, creating a budget will bring a level of certainty, and it helps to determine the affordability of your family’s future lifestyle.
Settle for the Right Life Insurance
Another aspect of financial planning many young parents get wrong is life insurance. As a young couple, it is often expected that you have not accumulated significant assets and are years away from your peak earning years. The function of life insurance is to help you maintain your family’s lifestyle, perfume your child’s education and cover debts or mortgages. Now, at the beginning of your family is the best time to sit with an insurance professional to discuss the types of insurance policies and choose the one that works best for you.
Reassess Your Savings Plan
This is the time young couples need to take savings and investing seriously if they are yet to. Even though the arrival of the baby will affect your spending and saving priorities, it is still important to have some savings as parenthood only gets more costly. There are lots of options of funding for children’s education; UGMA accounts, trusts, children’s savings accounts, MeFirst & KidsFirst (First Bank), Early Saver (Access Bank), Zenith Bank’s Children Account (ZECA) etc. The main principal thing here is that you contribute regularly, no matter how small.