For newlyweds or those who have been comfortably living married life as two, embarking on the journey of parenthood can be exciting yet sometimes scary. Your little family is now about to become three and life as you know it is about to dramatically change.
Amidst the anticipation of receiving the newborn, most couples tend to overlook the expenses that come along with the little bundle of joy. Things that used to seem unimportant before are now making their way to the top of your priority list, from putting aside money for diapers and milk to planning funds for college education. Realizing the need to take time and plan your family budget early can help eliminate the shock that occurs to many new parents when they notice the cash flowing steadily out of their pockets.
At the end of this article, you will be able to identify steps you need to take to plan your finances according to current needs in light of the family’s new addition.
Baby-steps towards managing your family money
Step 1: Know your financial status
Ask any parent and you will know that the needs of your newborn takes precedence among other things. However, you must ensure that your current financial commitments are still taken care of as they too are part of your responsibilities. When discussing the issue of financial status, keep in mind that the new expenditure additions are not just for buying necessities such as baby clothes and diapers, but also for pre and post maternity expenditure for the mother.
Step 2: Create a check list
This is one of the most helpful and useful things that you can do to jumpstart your financial planning. You and your partner should list down items or services that you think you would need according to category such as baby travel gear, furniture, bathing and feeding necessities and so forth, so that you are able to trace if there are any important items that you might have missed out. Don’t forget to also list down an emergency category such as the sudden need for cesarean section birth or other medical related expenses.
Step 3: Browse for the best prices
When shopping with your check list, don’t jump and grab the first item you see. Take time to browse and compare brands, making sure you jot down the prices next to the items in your list. Try not to be swayed by big names and branded goods. More often than not, you can find similarly good quality products without having to pay as much as the better known brand. While browsing, take time to ask the sales assistants on the usage of the items you are looking at. Sometimes, the items you think you need as soon as the baby is born can be put off until later when the baby is older.
Step 4: Buy only what you need
Now that you’ve done your browsing, go back to your check list. By now you would have an idea of the things that you really need when the baby comes, and those that you can put off to buy later. Strike off the items that you don’t need for now, or put a KIV note next to it.
Step 5: Put your KIV items on a wish list
Generally, friends and family love getting gifts for newborns. Sometimes, due to the sheer amount of baby stuff available out in the market, they just don’t know what to get you and end up buying toys or other things that you can do without. Therefore, create a list of items that you want for the baby and indicate price along with place of purchase. Next, announce the wish list via communication points such as emails, blogs or social networks so that they can go out and buy it for you.
Now that you know how to tackle the current issues, keep in view the upcoming expenditure that is for sure to occur such as the baby’s monthly medical checkups, baby sitter or nursery fees and domestic help wages. It is also wise to start exploring possible investment options for your child’s education fund. By investing money for their education, you are not only securing your child’s future but your future as well.
With all the above set in motion, you can enjoy your experience of becoming new parents without having to worry about financial surprises along the way.
© Securities Industry Development Corporation 2008. For more information on wise investing, log on to Malaysian Investor (www.min.com.my)
