A few weeks ago we participated one of Experian’s credit chats where the topic was ‘what to expect (Financially) When you’re Expecting. You can access chat info by clicking here. As a follow up we’ve put together some tips to help you plan for your baby’s arrival and avoid financial ruin in the process.
You’re pregnant, now what?
Once you find out you’re pregnant or start planning, you need to be aware that baby will have an almost immediate impact on your budget and how you spend your money. For instance, your eating budget will change as there will be certain foods you cannot eat or beverages you can’t drink (bye, bye coffee mornings and wine evenings). It is wise to start mapping out a financial plan as soon as possible so you’re prepared.
The first thing you need to do is look at your current budget and adjust for your baby costs. Where can you cut down? You and your partner should take a very good look at your household budget, think about any big changes you might also have to consider. Will you need a bigger home? A new Parentmobile? If you’re a single parent, you also need to consider what possible lifestyle changes you may need to look at to prepare for baby.
Savings and debt: How much do you have in your emergency fund? Do you have an emergency fund? How much debt do you have and how will it affect your finances when you have to include baby’s financial costs? You should consider setting up a baby fund to cover unexpected costs. If you’re still planning for a baby, begin setting aside money then. The more you have, the better. Think about how you can reduce your debt. If you can, try and pay off as much debt as possible so that you have disposable income to accommodate your baby.
Medical Aid and healthcare costs: Check ups and birthing can end up being very expensive. Do some careful research into what your medical aid does and doesn’t cover. If you’re on a hospital plan, consider an upgrade. You’ll need to speak to your medical aid about this and see what their policy on upgrades for pregnancy is. If you don’t have medical aid, and you can’t afford it, try and find a reasonably priced doctor where you will have your check ups done. If this is an expensive option, look at a good public clinic where you can go for check ups. Find out how their prenatal services are structured. Most clinics have specific days where they cater for prenatal check ups, so have the necessary info beforehand to avoid an unnecessary trip.
You’ll also have to start thinking about which hospital you’re going to have your baby, and look at booking your bed in advance (for private hospitals). If you’re planning on having a baby in a different city or province, make sure you have a doctor as well for the birth. You should also consider that some doctors work with particular hospitals, so bear this in mind when you’re booking a bed.
Maternity Leave: This one is important, especially if you’re a single mother as going from a single income to no income can leave you in a mess in a time when money cannot be a problem. Speak to your HR about your company’s maternity leave policy. You should also consider UIF (Unemployment Insurance Fund). You’ll only be eligible to claim if you’ve been contributing to UIF. If you have any questions, pop in to your nearest labour department or visit My Claim Mate for online assistance with making a claim. [Read: How to Claim UIF Benefits for maternity leave.]
Life Cover and estate planning: A baby means changing to your life insurance and will, policy documents etc. Set up an appointment with your financial planner and go over all your financial policies. Remember to read the fine print very carefully. You will also have to look at how pregnancy will impact various premiums your pay. Let this be an very important part of your household finances and financial plan.
Education: It’s never too early to start planning for your child’s education. Shop around for an education plan that fits into your lifestyle and budget. Will you split pre-primary, preparatory school and high school fees? What about university? Will you need different plans for the different stages? These are just some of the questions you’ll have to consider when planning for your child’s future.
This isn’t a finite list, but these are things you should consider when you first discover that you’re pregnant or when you decide to have a baby. They joy of having a baby should not be tainted by a financial mess. With a little planning early on you can avoid financial difficulty later on in your pregnancy and after baby is born.
We highly recommend visiting http://www.babygroup.co.za for great advice and resources to help you prepare for having a baby.