Most parents will tell you that you’re never really prepared for the massive life changes that go hand in hand with having a first baby, so the last thing you want to be worrying about is your finances. Of course, other than sleep, finances are one of the first things to take a hit as new parents find themselves learning to cope with reduced income and increased costs. This is the time to put a financial safety net in place. Even though sooner is better, it’s never too late to start — so here are five ways to get your finances ready for the arrival of your first baby.
- Create a savings safety net
Before children enter the picture, your savings were most likely going towards big ticket items like cars, holidays and appliances. It’s time for a rethink — and to funnel some or all of those savings toward a different goal — the much less fun sounding “unplanned events”. By creating a buffer to deal with the drop in income you’ll not have to stress as much should something untoward happen, such as the loss of a job or a medical emergency.
- Put your bank accounts to work
Your bank will have a variety of accounts all suited to different tasks, so have a chat with them and figure out the best account to suit your needs. It could be an interest bearing savings account that encourages saving or a regular account that offers a little more flexibility should you need it. Set up recurring payments on payday from your cheque account to a savings account — even a small amount will add up surprisingly quickly. BNZ offers these options.
- Make a budget and stick to it
Changing your savings goals and sorting your accounts out are a good start, but sometimes the money just seems to melt away — if this is you, it’s time to make a budget. At heart, a budget is simply a way of better understanding the various components of your income and expenses. Begin by working out your needs and wants, write down all your fixed costs and track your spending by creating a spending diary. Internet banking is a great place to start doing this as many of your expenses will already be listed there making your budgeting easy. Check the ‘Good with Money’ hub and BNZ Baby Budget calculator where you’ll find information about everything from pregnancy essentials, making a family budget, to reducing your credit card debt.
- Sort out insurance
Insurance becomes even more important when there are little ones suddenly in your life. While it’s never nice to think about, you want to make sure your kids are looked after should the worst happen. There are many different types of insuranceto choose from so speak to an expert and find out exactly what kind of, and how much insurance you need.
- Maximise your savings
If after all that budgeting you’re managing to put a little money aside, it might be time to look at ways to make that money work a little harder. This could be via a high interest savings account or a term investment. Term investments cover a variety of different rates and terms, all of which offer the potential of increasing your income by making your money work harder. With a bit of forward planning and organisation you’ll be better prepared to manage your finances when baby arrives.