The new parent’s guide to saving for the future
Just had a baby and want to help them get the best financial start in life? Here’s your new parent’s guide to saving for the future.
Whether you’re an expectant parent for the first time round, waiting on your second or third new arrival, or have finally finished growing your family and have only the future ahead of you, planning financially for your family’s growth and the lives of your children is never guaranteed to be an easy task on the face of it.
For many, new parenthood simply provides no time to do much else but get through the day-to-day, making the concept of actually having mental space to plan feel foreign, fuzzy, and plain far-off.
Thankfully, young parents will find that they can create order as they adapt to their new schedules, finally providing them with the time and energy needed to sit down and start thinking about preparing for the future. To help, we’ll be outlining some of the foremost financial concerns that new parents should keep in mind as their kids grow older.
Protect your assets
If you and your partner have just become homeowners alongside experiencing the trials of parenthood for the first time, then chances are you’re also wondering how to protect your family’s shared assets.
Securing the right home and contents insurance policy for your household can naturally help alleviate a lot of the stress and uncertainty for young parents, especially those that may be concerned about sudden home repairs or adverse damages that have the potential to uproot your family.
With the right insurance policy in place, you can feel rest assured that your home and all covered valuables will be accounted for in the face of unforeseen circumstances such as damage caused by fires, storms or other adverse weather conditions, and break-ins or even incidents that occur on your property that may leave you and your family liable to pay damages (speak to your insurance providers about liability cover).
Make sure you consult with your family’s accountant or other preferred financial advisers prior to finalising your insurance, just to ensure that your selected policy provides cover for all events or circumstances that you’d prefer to be covered for.
Set up investment growth bonds
Also known as an insurance bond, these long-term investments tend to be very popular amongst parents looking to provide financially for two or more children, as they offer greater tax efficiency than other types of investments like managed funds.
Investment growth bonds can be kept for decades, with many financial providers offering incentives like rebates and opportunities to receive withdrawals as tax-paid if investors are able to maintain their investment bond for a desired period of time.
Although investment growth bonds are a superb option for larger families, there’s no reason why new parents shouldn’t secure a growth bond even if they’re only planning to have one child.
After all, you can never really have too much saved up for your children’s future, and any additional income stream you can secure for your child during their developmental years will be much appreciated once they’re old enough to reap what you were able to sow for them all those years ago.
Open up savings accounts for your kids
If you’re still feeling a little time-poor as a new parent and are searching for a quick and easy way to help get the ball rolling on generating savings for your children, then we highly recommend opening up dedicated savings accounts for each of your kids at your local bank.
Making even minimal deposits in a high-interest savings account over the course of your child’s life, can help you put together a fairly well-sized nest egg to provide to your child once they turn eighteen.
Your child’s savings account can even be given to them earlier if they happen to enter the workforce during their time in school. For kids who are actively earning an income, having an established bank account to continue growing themselves can naturally be a powerful motivator for growing their own life savings, and a fantastic way to introduce them to the concept of being a lifelong saver as well.
Plan for upcoming developmental expenses
For parents who are feeling particularly overwhelmed about the prospect of having to save for a whole lifetime of milestones, it’s well worth outlining the expenses that are immediately looming on the horizon. These usually tend to include the costs of childcare, healthcare for your kids as they develop, and of course, the costs of their education.
Naturally, these costs can vary depending on whether or not your healthcare policy covers your children, and whether you’re looking to secure placements for your kids in a publicly funded or privately funded school.
Consider putting savings plans and perhaps even additional bonds in place solely for catering to these costs. In doing so, you can help ensure that you and your family are prepared to meet these expenses when they come your way, freeing you up to simply enjoying your child reaching these developmental milestones as they occur.
Start preparing your will
Finally, although it may feel odd to start planning for the event of your own death following the birth of your child, there’s no denying that preparing your will nice and early can be a major source of comfort for new parents, even if just for the sake of ticking off yet another box on the lengthy to-do list that accompanies life as a grown up.
In fact, many financial advisers and legal professionals advocate for individuals setting up a will as soon as they turn 18, and then revisiting this will upon the birth of their children, as your will can also consider legal guardianship of your child in the event of your death.
Alongside preparing your will, new parents may also seek to establish a family trust to simplify the process of protecting shared assets like properties or even family-owned businesses in the event of you or your partner’s passing.
Saving for your children’s future naturally requires young parents to have many irons in the fire, so to speak. Thankfully, you have eighteen whole years and then some to make sure that you and your children are in the best possible position to handle anything and everything that time may throw your way.
So start now and start with the confidence that whatever step you do take today, will still be sure to make a positive impact when it’s needed most.