Money Talks: What new parents need to know about budgeting for a baby
With a new baby come new costs so it is now more important than ever to review your household budget
Firstly, congratulations to you both, you must be so excited! Becoming a parent is the most amazing, life-changing event that you will experience. However, preparation is key as you embark on this exciting new adventure. It would be especially helpful to be ready for the associated financial changes that are coming your way.
It is very important to know exactly what state-related leave and benefits you will both be entitled to as expectant or new parents and to know how to apply for these.
With a new baby come new costs so it is now more important than ever to review and amend your household budget to include both the upfront costs in terms of maternity care, buggies, etc, and then the recurring costs which will certainly influence your household budget in the long term.
You need to understand the importance of Life Cover and Income Protection and how important it is now that you will have a dependent. These policies will protect you and your family financially against worst-case scenarios.
In the event of your untimely death, it is so critical to have arrangements in place for your children. A legal will would provide a plan for the division of your assets and designate a legal guardian for your child.
Unemployment is stressful, but more especially at a time when your family is growing. That is why it is so helpful to have an emergency fund that will cover at least 6 months of living expenses in the event of an unexpected redundancy or sudden change in employment. This fund will provide a comfortable cushion while the search is on for a new job and should always be calculated based on the new family budget.
Having children does not necessarily mean having to work longer but your pension plans may need to be adjusted to accommodate your new arrival. Prioritising your own retirement plan now will prepare you better for the future and greatly reduces the possibility that your child will need to support you financially later in life.
According to The Zurich Cost of Education Survey 2020, the total cost of education from primary right through to third-level stands at €52,306 per child. It is important to know how to plan properly for these costs without totally derailing the family finances. Not enough parents place saving for their children’s education as one of their top child-related financial priorities – maybe this is because the expense seems so far off but the sooner you start saving, the more options your child will have when the time comes, and the less pressure there will be on your overall finances.
Your Health Insurance Provider will not automatically add your newborn to your existing health plan. If you are happy with your existing plan and you are confident that it will meet your requirements as a new family unit, you need to contact them to make them aware that you have had a baby and they will make the changes to your policy or maybe now is the time to revisit this area and purchase a new more family-orientated one altogether?
Consider these points a starting point for adapting to your new financial reality. Addressing your requirements now will greatly minimise any stress down the road and allow you to spend the most time loving and caring for your newborn. Good luck!
