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WELCOMING a baby into your life can be a wonderful and joyous experience.
The new arrival can even bring a more profound sense of purpose — and, inevitably, a lot of extra bills.
“Many young couples discover that the cost of caring for a baby is much higher than they expected,” says Shafeeka Anthony, marketing manager of JustMoney.co.za.
“Informing yourself about the financial implications before you fall pregnant can help you differentiate between expenses that you can’t avoid and products and services that are well-marketed but that you don’t need.”
Anthony offers the following tips when planning for a baby:
Assess your current financial situation: Determine your total annual income and weigh this up against your expenses.
Checking your bank statements is a good starting point to determine where your money goes.
Prepare a baby budget: List all of the services and products you will need and start planning how best to source them at a reasonable price. Check where you can cut back on expenses.
Maximise your medical aid: Medical treatment is expensive, so belonging to a medical scheme is an essential part of your financial planning.
Check what is covered for the birth and related medical expenses. Keep costs down by giving birth in a hospital part of the scheme network and using specialists who also form part of this chain.
Explore gap cover: This helps cover shortfalls in your medical aid, for example, if you require a specialist outside your medical scheme’s network or a doctor whose bills are higher than the set rates. There are generally waiting periods for benefits, so apply sooner rather than later.
Start saving: It is always advisable to build up an emergency savings fund to cover your costs for about three months. When choosing a savings account, compare how much interest you can earn, the costs associated with the account and the entry amount.
Life cover: This insurance is of great value as it provides financial support for your family and could cover your outstanding debts if you die.
A level premium means you will pay the same amount every year. An age-related premium is cheaper initially, but there are compulsory annual escalations.
Draw up a will: This is a legal document that sets out instructions regarding inheritance, guardians for children under 18 years and the executor of your estate. A will must be signed by yourself in the presence of two witnesses.
“Speak to a financial adviser about the above matters.
“An adviser is uniquely qualified to help you manage your money and secure a future for both you and your baby,” says Anthony. — Fin24
Bongani Ndlovu
Online Reporter