There are few words more exponentially life changing than ‘I’m pregnant.’ For some these words are a source of immense joy and excitement whereas for others, fear, dread and absolute terror are more appropriate ways to describe their reaction. Regardless of the reaction to the news, the reality is that life as you once knew is about to change.
As a prospective parent, I think it’s safe to accept the fact that there is no possible way you can prepare for how much your life is about to change until your child arrives. However, just because there are huge elements that are outside of your control, it doesn’t mean there aren’t practical things that you can do to make the journey less stressful.
As money is one of the biggest reasons for divorce and separation, throwing a screaming child and sleep deprivation into the middle of financial stress is a recipe for disaster. Today we want to give you some hope that there are some practical things that you can do to make your transition to parenthood that little bit easier, at least from a financial point of view.
Starting a family instantly raises some financial issues that need to be addressed. Maternity leave, paternity leave, child care, losing an income, increasing expenses, is the car big enough, the realisation of how much of a potential death trap your home is to an inquisitive toddler etc.. etc.. are all things that are suddenly front of mind. All of which have a financial impact.
While this can seem overwhelming, the good thing about understanding the financial impact of starting a family is that you can plan for it. A few practical things that you can do are:
– a lot of the time starting a family comes hand in hand with a reduction in income, and a whole lot of new expenses. Taking the time to understand the impact a reduction in household income will have, BEFORE the baby arrives, gives you the opportunity to make informed decisions and can have a huge impact. For example, a lot of families rely on 2 salaries to support their mortgage payments. This means if one person takes time off work there is a very real risk that you may fall behind on those payments. Alternatively it can also mean a huge increase in credit card debt that you no longer have the ability to easily repay. Planning ahead gives you time to either save the money you need to get you through, or assess whether you should consider moving somewhere more affordable.
– when our whole lives are tied up in 1 big goal or event such as having a child, it’s easy to lose sight of the bigger picture. Just because you have a child on the way doesn’t mean your life is over along with all of your hopes and dreams. It just means things are about to change. Taking the time to plan ahead gives you things to look forward to, things to work towards. It can give you the hope you need to get through another night of no sleep.
– leveraging off friends and/or family members for help with the baby is great, but our experience is that financial advice from the same sources can be hit and miss. While some of the advice may be well intentioned, it can also be very biased and based on no real understanding of your actual financial position. This is where obtaining advice from an unbiased professional can help you review your options and make informed decisions without the potential guilt trip.
– Having a flexible longer term plan in place now that your family is about to grow can also make the whole process a lot more bearable. While it’s easy to focus on the fact that the first 12 months in particular may be hard, children do grow up and just knowing that you are on track to achieve some of the things that are important to you gives you more resilience and one less thing to worry about.
In summary it’s all about controlling the controllable to give you the confidence to face the unknown.
This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider you financial situation and needs before making any decisions based on this information.