Financial Planning Tips For Couples About To Start A Family

Couples, especially newlywed ones, would usually enjoy a bit of financial windfall for the first few months or years of their marriage. This is mainly due to the fact that two people are now sharing the expenses on food, utilities, and other expenditures. There are also more opportunities for couples to save money since they have lesser expenditures to pay for.

This happy situation can easily turn sour though when couples are expecting their first child. With this new bundle of joy come various additional expenses that parents will sometimes find it hard to cope with their financial needs and even adjust their lifestyle.

Couples, though, don’t need to find themselves broke simply because they are expecting or already have their newborn baby. Below are some useful financial planning tips couples about to start a family can follow:

Start living a simpler lifestyle. It is not unusual for newlywed or childless couples to have date nights once or twice a week wherein they have dinner at a fancy restaurant and give each other lavish gifts. They will also go on vacations abroad once or twice a year because they want to get some rest and relaxation and because they “deserve it”. Unfortunately, all of these will have to change or even stop once a couple is expecting a baby. All the money you will save from these activities or events can go to something more important like payment for the hospital bills, medicines and vitamins, diapers, and other expenses that come before and after the baby’s birth. The last thing you want to happen is to be covered in debt just because you are expecting a baby. You can avoid this problem by living a simpler lifestyle once you know that you are expecting.

Anticipate your expenses. Make a list of all your anticipated expenses. These include hospital bills, doctor fees, maternity clothes, birthing classes, and necessities for the baby (a crib, stroller, feeding bottles, blankets, etc.). Then, calculate the total. You now have to rework the budget you and your partner are currently on to include this cost. Expect that there will be expenses that have to be added in the future but don’t fret; you will be able to figure them out as you go.

Increase your emergency fund. If you already have a safety financial net, you and your partner or spouse should now work on increasing it. Financial advisors recommend having six-to-nine months of living expenses set aside in case of job loss, which can become more of a problem if one spouse is at home on childcare duty. Look at your budget again and figure out how much you can afford to put into an emergency fund after all the basic necessities are covered.

Financial Planning for Women

Financial planning – the term in itself refers to making of concrete plans to improve your financial power. Now, unlike what some people may think, financial planning is not at all difficult, all you need is to be aware, think and calculate. After all, financial planning is a mathematics, which is rational and as simple as 2 plus 2 equals 4. So fear not, here are some tips, plans and some do’s, also some don’ts.

Now, here, I shall be taking you through some great investment and planning channels, plus some tips for planning your expenses well in advance. Financial planning for women involves handling two primary aspects related to personal finance, expenses and investment. When you receive your paycheck, there are two things that you can potentially do: one, use the money for essential expenses; and two, investment the money. Note that common savings is also included in expenditure.

Planning for Expenses

Personally, guys no offense, I believe that since women are capable and do manage one of the most difficult institutions in society, that is their family; they are better at handling expenses (not through credit cards), than most men. This was not a compliment, but a fact.

So, principally, about 20% to 40% of your income is going to be spent on essential expenses, food, clothes, make-up and cosmetics, rent and commutation. Now before the month starts, calculate and estimate how much you would spend on each item. Also you would need to include some expenditures such as a couple of parties, sleepover and hangouts while doing so. Some of you may have medical expenses hence consider those too. Listing these out was the first step, next analyze and make a list for identifying the expenses which you can cut down. If you look, observe and think properly, you will notice that, except for things such as food, rent and medication, you can cut down on almost everything.

The third step is to make a table of budget with 22-30-31 columns (covering days of a month), whichever is appropriate. In this table, write down the expenses that you have estimated and throughout the month try to stick to them. This can be quite difficult and also quite easy. Since sticking to the budget is not always possible and some unexpected expenses tend to come up, one can always put away certain amount of money as a backup fund.

Planning for Investments

After you have paid off all your expenses, you can turn your attention to investments. Again this can take about 30-40% of your income. The following are some excellent options which you can use.

Life Insurance: If you have a family, then this is the most important investment for you, as a life insurance not only pays off all the returns on investment, but there is a death benefit which is available which ensures your family’s financial security and well-being. You can invest up to about 10-15% of your income in such an insurance policy.
Funds and Securities: Mutual funds, variable annuities, Systematic Investment Plans (SIP), Collective Investment Schemes (CIS) and other mutually invested funds are medium risk investments. Here you have a 5-7% return on investment along with the total amount that you invested initially. This facility is termed as guaranteed minimum returns facility. Apart from the minimum returns in such schemes, you also receive the bonus and portfolio performance returns, which chiefly depend upon the portfolio performance and also economic conditions. Again this can take up about 10-15% of your income.
Government Provided Investments: These are the most secure of all as investment options. Channels such as IRA, 401(k), government bonds and certificates tend to provide a good rate of return that accounts to about 5%. Such investments will take up even lesser than 5% of your income.

You can also consider some options such as real estate, direct share investments, gold, silver and bullion and futures and options. However, such investments are quite risky and worst of all you have to invest a lot of time in them. Apart from that it is also recommended that you maintain a 30% balance in your bank account as a safety precaution. Now, all you have to do is plan accordingly and choose the right expenditure and investment.

 

Financial Planning Tips When Expecting a Baby

First time parents are expected to go overboard with preparations once their baby is on the way, be it expenses on baby clothes, accessories, nursery decorations, baby showers, etc. Shortly afterwards, the initial excitement wears down and the nine-month gestation clock starts ticking until D-day. This is when the realization of the extra cost of having a baby sinks in. This is the time when would-be parents start thinking about all the prenatal medical expenditure, expenses towards hospitalization and delivery, pediatric medical expenses, baby food expenses and money spent towards buying clothes, toys and education. I know the list is long and might seem like a money monster which will take away all the excitement of fine dining and shopping that you experienced before the baby came into picture, however, I wish to assure you that some of the financial planning tips listed below will surely ease your journey.
How to Save Money When Expecting a Baby
One of the biggest expenditures for children generally happen to be towards their education. But even before your baby is born, there are heaps of expenses to be dealt with. Here are some ideas to help you deal with these expenses.

Prenatal Medication
As soon as the pregnancy test is declared positive, would-be parents need to start shelling out money towards medical tests, ultrasounds, fees of gynecologists, nutrition supplements and so on. The uphill burden of expenditure can be reduced by opting for a health insurance policy right from the time you get married or start planning your baby. The health insurance company generally expects policyholders to pay a minimum amount towards each medical bill while the rest of the medical expenses are borne by the health insurance company. As a thumb rule, check if your hospitals, gynecologists and pharmacies accept the insurance policy that you have. If not, then I recommend that you search for medical services that have a tie-up with your health insurance company before you set up an appointment. This will help save a lot of money.
Preparation for Baby
It is delightful to go shopping for baby clothes, cribs, car seats, strollers, baby monitors, etc. Some of you might even redo an entire room, converting it into a nursery. As exciting as it seems, babies tend to grow very quickly and it is therefore futile to spend a huge sum on new and expensive baby clothes. Even doctors recommend usage of soft, tender and used baby clothing on babies.
Personally I suggest that you may opt for borrowing baby clothes, cribs, strollers, etc., that have been previously used by your friends for their babies. And if you are lucky enough, you might receive some new accessories for your nursery as baby shower gifts. I can’t help mentioning a noteworthy fact about pregnancy in advanced stages. The recommended restrictions of movement and food consumption for a pregnant woman are likely leave a considerable surplus of money in your kitty.
Delivery
As previously mentioned, couples might have to be careful while selecting hospitals for the upcoming childbirth. It is ideal to get confirmation about the hospital’s tie-up with your health insurance company way before the due date. It is also recommended to get similar confirmations from the obstetrician and anesthesiologist before you appoint them for the delivery. This will help you save a huge sum towards delivery and hospitalization expenses. The arrival of a baby is a wonderful moment. But it is suggested that you find some time to check with the health insurance company for possible addition of your newborn child under health benefits. This might mean an additional expenditure towards premium, but trust me, it is well worth the expenditure. After all, there might be – god forbid – some unforeseen health expenses for your baby.
Baby Arrival
It is quite common for both partners to be working professionals. As soon as the baby arrives, the maternity leave and paternity leave begins. This means that the family income decreases considerably as long as one parent stays at home as a caregiver. It is ideal to refer to the policies of your organization to make sure if they have an option of paid maternity or paternity leaves. At times, organization offer a maternity leave allowance instead of a full salary payment. This stage also marks a steep rise in expenses towards baby food, diapers, pediatrician visits, toys, day care charges or baby sitter charges. These expenses could range anywhere between $1000 to $1200 each month. Accordingly, money needs to be religiously set aside for such payments by both the partners. If you happen to be a single mother, then you have the option of applying for single mother financial aid too.
As the Baby Grows
Before you even realize it, your baby will become a toddler ready for play school. Personally, I suggest that this is the best time to invest in a good education plan for your child that will help secure his or her higher education needs. Such plans are designed keeping in mind the growing inflation rate of the economy. If you love to plan about your every penny, then it is best bet to start saving at a slow rate right from the time you get married. By the time your child is ready for school, you will be surprised at the huge amount you will have saved by then.
Financial planning is a must at all times. At the prospect of arrival of a baby, even the most spendthrift partners start getting calculative. Early planning and budgeting can help couples avoid a lot of mental stress over finances after the baby arrives. This financial security can help you delve wholeheartedly in the realms of your newborn child.