Securing your child’s financial future

Money cannot buy happiness — but it can help protect the ones we love, who bring us the most joy in life. As a new parent, or an expecting one, your child becomes your number one priority. It is our duty to ensure they are protected and that their future is in the best possible financially secure hands.

But where to start?

There are many aspects that one must consider when becoming a parent, but the responsibility that cannot be overlooked is financial security. Most of us are aware that having children can become a very expensive endeavour really quickly — but planning ahead can help you better navigate this treacherous landscape of newly appointed parenthood.

One of the best ways to make sure you are properly prepared for your child’s financial future is to speak to a qualified financial adviser. A financial adviser will be able to look at your financial portfolio objectively and give you the necessary advice on how to revise it optimally — while still keeping your personal financial goals in mind.

Financial necessities to take into consideration for your little one:

Update household budget

Do your market research and find out how you can afford good quality baby monitors, strollers, cribs and diapers, among other things, without breaking the bank. You might need to reallocate some of your funds to ensure you have enough spending money when your baby arrives. This does not, however, mean cancelling a policy that will protect your family in the future. You might simply swap out a few of your spending habits for more budget-friendly alternatives.

You want to keep things like unforeseen medical expenses in mind — sometimes your health insurance doesn’t cover everything or your medical savings run out. The cost of baby food can also add up – your revised budget should take this into consideration.

Add your child to your health insurance plan

If you are under the illusion that your health insurance will contact you to add your newborn to your health plan – that is unfortunately highly unlikely. Having a baby would likely require an enrolment period during which you can make the necessary changes to your policy or upgrade to a different one that accommodates the soon-to-be new member of the family. Be sure to find out what your health insurance covers with regard to the delivery and post-delivery hospital costs – revise them at least three months before the due date.

Life insurance, capital disability and severe illness

Once you have your household budget and health insurance in place you need to start considering life insurance which includes severe illness and capital disability coverage. Some insurance companies offer dual-purpose life plans which cover your severe illness and capital disability under the same policy. None of us wants to think we’re going to fall sick, get injured, or even pass away prematurely but protecting your family will give you peace of mind. Make sure your legacy is one of someone who protected their family even from beyond the grave.

You need to get a will

Having a will helps those that remain after you’re gone to handle your personal responsibilities and wishes in the ways you’d have wanted. If you’re going to be a parent, you need a last will and testament (if you already have one, you need to revise it).

A will ensures that your assets and personal possessions are divided up among those individuals you want to inherit them. Without a legally valid document setting this out, your estate won’t necessarily be bequeathed according to your wishes. Once a will is set up and complies with legal requirements, it must be kept safe along with all the necessary documents that apply to each mentioned asset, including investments, life insurance policies and property.

Revise and update your emergency fund

I refer to an emergency fund as the c’est la vie fund (that’s a life fund). An emergency fund covers unforeseen expenses that pop up unannounced, for example, a household appliance breaks. Make sure you have at least three to six months’ salary saved. After Covid-19 most of us realised the immeasurable value having an emergency fund brings to your family’s financial footing. If you feel like you are unable to save enough with the new baby on the way – remember that saving a little is better than saving nothing at all

Start saving for your child’s education

Saving for a child’s education is a lot like the Chinese proverb: “The best time to plant a tree is 20 years ago. The second-best time is today”. If you feel overwhelmed by the costs of sending your child to school or a tertiary institution – remember that the sooner you start saving, the more compound interest you will earn, and the better your long-term gains will be.

Do your research and speak to your financial advisor about all the available education protection investments you have to consider and be sure to choose one that offers cover for severe illness and disability – not only life cover. Oprah Winfrey once said: “Education is the key to unlocking the world. It is the passport to freedom.”