Why Financial Planning Is Important For New Parents
Couples expecting a little bundle of joy are often overwhelmed by the sheer excitement of it all. In the midst of all the action, some important details may be overlooked, so here’s a simple financial checklist that all new parents should consider! In case of an unexpected emergency, you will need to sort out individual life insurance for you and your spouse so that the family is left with some resources to raise your child. Take into consideration any debts, school fees and housing when picking out a life insurance plan. Will the payout be enough to help your family along in a time of need?
Not having life insurance for yourself
Thinking about your own death is not a happy proposition for anyone. But as a parent you need to ask yourself this “What If” question. You need to make sure that your family will be well taken care of and your child’s education and healthcare will continue even if you are no longer there to provide for it yourself. Accidents may happen and it is only responsible that you take care to insure yourself so that your loved ones are provided for should the unfortunate were to occur. Term plans are a fairly affordable way in which you can protect your family. How these plans work is that you first choose an amount that you want for your family – the Life Insurance Association of Singapore suggests 10 times your annual salary. Next, you choose the scenarios you want your family to be financially protected against, which are typically death, critical illness, terminal illness, and/or disability.
Set up a will
New parents should take some time to think about who they would want as a guardian to raise their child if both parents were to pass away unexpectedly. You should also ensure that this individual is trustworthy and responsible enough to handle whatever money you leave behind for your child’s upbringing. If you doubt the guardian’s ability to handle finances well, you can also appoint a financial guardian who will specifically take care of money matters and assets for your child.
It is strongly advisable to start up a fund for your child’s future needs. If you don’t know where to start, your top priorities should be health-care and education. You never know what complications may arise in the future, so it’s always best to have some money saved for an emergency. If you can save up for your upcoming family vacation and the new pair of shoes you have been eyeing, or your child’s next themed birthday party, it is also important to remember to set aside some funds for your little one’s future education. All parents want their children to succeed in life, and with quality education you can rest assured that they will have the foundation to achieve their dreams. Committing to a structured savings plan will force you to be disciplined about setting aside money regularly for junior’s tertiary education. Such savings plans that are specially designed for children’s education are usually readily available from banks or insurers.
Buying health insurance for your baby
After your baby is born, call up your insurance provider within 30 days to add your child to your insurance policy. Some parents choose to save on the premiums for a health insurance plan. Fact is, children will get sick. If we are lucky it will be sniffles, a touch of flu and an occasionally upset tummy. However, we all know that broken bones and occasional hospitalizations are not uncommon when it comes to children.
The cost of medical treatment often comes unexpectedly, and can be very expensive. It probably makes more financial sense to transfer the risk of that unexpected high cost to an insurer instead. There may be economies of scale you can potentially reap when you purchase medical insurance for your family members. Look out for the different discounts offered by insurers as the savings could be more significant than you imagine over the long-term.
Assess your income situation
Take a look at the current income situation and discuss how that may change once the baby comes along. Will you be extending your maternity leave to spend more time with your baby, or will you be hiring a babysitter once your maternity leave? Do you intend to breastfeed or formula-feed your child? Try to do a rough calculation of how much you will be spending on diapers, formula and other important necessities each month to see if this amount fits comfortably into your budget.
Not making use of grants given
Starting a family may come with a few expenses, so new parents should take advantage of all the grants given by the government to help ease financial costs of raising a child. Singaporean babies can benefit from the Baby Bonus Scheme (which now includes a cash gift for all Singaporean children) and government matching savings into their Child Development Account (CDA) that can be used for their early education, medical bills, optical needs and other necessities from approved institutions. Take time to read through the policies and create a plan for how you plan to use these grants and support from the government in your child’s development.
Overspending on unnecessary items
Okay, this can be hard for many of us, because there is always something just “so cute” or “so perfect” that we must have it for our little one. But take a moment and think, do you or your baby really need that overpriced contraption to warm up wet wipes? Or that expensive diaper disposal unit which claims to stop odours? What about that well-known teether toy that is all the rage with celebrities?
There are some parents who find it hard to draw the line between necessities and novelty items for their little one. Don’t be one of those parents. Before buying those adorable shoes for your one week old baby who can’t even walk yet, it would be a good idea to ask around for a baby checklist from your experienced friends and family. This will save you from overspending on unnecessary items and cluttering up your storage space in the long-run.
Financial Services Consultant
SP-DAVIDCHIN (JAKEYU District)
M: (65) 9650 8000
You would be able to contact him at 9650 8000 for more details.https://www.babyclub.com.sg/financial-planning-important-parents/https://www.babyclub.com.sg/wp-content/uploads/couple-with-baby.jpghttps://www.babyclub.com.sg/wp-content/uploads/couple-with-baby-150x150.jpgFeaturedParentingCouples expecting a little bundle of joy are often overwhelmed by the sheer excitement of it all. In the midst of all the action, some important details may be overlooked, so here’s a simple financial checklist that all new parents should consider! In case of an unexpected emergency, you will...Jason TanJason Tanjasontan@babyclub.com.sgAuthorBaby Club Singapore