How to have a baby and still reach your investment goals
The happy news needn’t be bad news for your pocket
Once the excitement of the news of your baby-to-be has worn off, the practicalities kick in. Where will the baby sleep? (Cue desperate call to architect for plans for an additional room). Where will they go to school? (Whopping deposit to be paid to your private school of choice to go on the waiting list). And, then there’s the consideration of that designer pram you covet, a “baby moon” holiday in Mauritius before your life changes… the list of wants goes on. Before your baby is even born, the bills rack up. Follow this advice to avoid putting your future financial health at risk.
#1 Don’t cut back on your investments
You’ve projected your savings and investment needs with your financial adviser, and this doesn’t change now that you’re a parent. In fact, ensuring you invest enough to be able to retire comfortably is more of a priority now than ever – you don’t want to be a financial burden on your kids in the future. If you are unlucky enough to work for a company that doesn’t offer you paid maternity leave (or you work for yourself), you can consider reducing your payments if you have a flexible retirement plan, but as soon as you have cash coming into your account again, ramp up your payments again. A short break won’t derail your investment goals, but the more you can invest when you’re young, the bigger the returns will be thanks to compound interest.
#2 Pay off your debts while you’re still earning a salary
It’s a tough one. Do you save during your pregnancy so that you can have a nest egg to spend while on maternity leave, or do you clear that credit card? Preferably clear your debt – credit cards, store cards – begin with the debt that has the highest interest attached to it.
#3 Rethink your baby shower
Sophie the Giraffe is cute, but does your baby really need one along with all the other baby gadgets on offer? Rather ask your friends to contribute towards an education fund or tax-free savings fund that you can use for your baby. It’ll give them a great start in life, and reduce your financial burden in the future.
#4 Don’t be shy to claim maternity benefits
Many companies only pay a portion of your maternity leave, requiring you to claim the rest from UIF. It doesn’t sound like much (it works out at about R150 a day), but add this up and you could expect to be able to claim about R35 000. Tax-free. Now that’s worth the hassle, right?
#5 Cut back where you can
As double-income earning singles, you’ve probably got used to eating out a couple of times a week and indulging in luxe getaways. Begin adjusting your lifestyle while you are still pregnant. Cutting back your dining habits alone could save you a couple of thousand a month. That’s a lot of nappies!
August 10, 2016
Grant van Zyl