No one has parenting all figured out, it is a constant learning curve. But learning from the few financial mistakes that have been made by parents who have gone before you can give you wisdom nuggets to manage your finances better and adapt it to be suitable for your families needs.
Keeping up with other parents
Comparing is the death of many budgets. Your finances are different from the next persons which is why it matters to have a plan in place that is suitable to you and your family. You will realise that you don't have to buy everything new, but there are alternative options that can keep up with the growth of our baby without putting a strain on your finances.
Not having life insurance
Now is the time to have a life insurance policy in place. Life insurance acts as a safety net for you and your loved ones and grows with you. There may be a lot of uncertainty when it comes to every life stage that you enter, but at least you will have peace of mind knowing that you and your loved ones are covered. Both you and your partner should have a life insurance policy to provide adequate cover.
Skipping financial planning
Things can get overwhelming very quickly when you do not have a plan in place on how to distribute your finances to work for you. Being open and honest with your partner regarding your financial situation is crucial, but it is equally important to include a financial advisor to help plan properly. Not only will a financial advisor help you budget, but they can also help you find ways to save and invest in ways that can be beneficial for everyone's future.
Being blindsided of the actual costs of raising a child
The cost of giving birth can range from R15,000- R44,000 which is just a fraction of the cost that will come after your baby has been born, which can be costly if no plans have been put in place.
Even with a good plan in place, such as having medical aid and a budget in place to cover you while you are on maternity leave, it only gives you so much breathing room before the unexpected costs of being a parent come in. Having GAP cover and MiLittleLife insurance are covers that can ease the financial strain.
Setting unrealistic saving expectations
It is advisable to start putting money aside the day you find out that you are going to have a child, but you can still do so even after they are born. Being realistic with your savings goal can make it easier to stick to it. Furthermore, it can help you gradually increase how much you put aside. Always start with an affordable amount that you will be able to gradually increase instead of starting with a sum of money that will be hard to keep up with.
Running up your credit
Having credit to cover some emergency expenses can be useful. However, using your credit for things that could have been budgeted for or things you and your baby do not need can soon see you running up your credit which can push you into debt. Use your credit to supplement your budget by using it for things that you need. A rule of thumb is to always use no more than 50% of your credit for emergencies.