Your guide to budgeting for a family

29 January 2014
2 minute read

How to budget for baby

Baby budget 101Do you want to hear the pitter-patter of little feet? Are you and your partner planning on falling pregnant this year? If the answer is a happy ‘yes’ then one of the first items on your pregnancy checklist is to spend some time calculating just how much your bundle of joy is going to cost you. If the thought alone is enough to send you straight back to bed then here are a few pointers for all you parents to be.

Budgeting for a familyWhere to start? How do you even begin to calculate the cost of having a baby? To kick-start the process think about grouping your expenses into the following categories:  

  • The cost of the pregnancy. Find out what your medical aid will cover and what the out-of-pocket expenses will be.
  • The cost of taking time off when your baby is born. Investigate any maternity benefits offered by your company and remember that you can also claim from UIF if you have been contributing.
  • Once-off expenses, for example the cost of a pram and car seat. Remember to buy as much as you possibly can second-hand.
  • Lastly, you also need to plan for an emergency fund to cover unexpected expenses – and as any parent will tell you there will be lots of those!

Now that you know what your expenses are you need to start saving to cover any gaps. You could consider working overtime or getting a part-time job to fast track your baby savings. If you are concerned about covering expenses while on maternity leave, you could investigate working part-time for those few months before you return to full-time employment.

Experts also recommend that prospective parents clear as much of their high-interest debt as possible – for example your store cards and credit cards. Try to pay off a much as you can on family cars as well.

You also need to work out some sort of monthly budget for your new family. Calculate the additional monthly expenses that baby will bring, for example child care, diapers, formula, an increase in medical aid premiums etc. There are a number of baby budgets and planners available online but be sure to talk to parents with young babies as well. Build in an amount for unforeseen expenses every month and don’t neglect your short and long-term savings.

Protecting against riskFrom its very first breath your baby will depend on you for everything. As a parent you need to plan for the day that you are unable to work to care for your baby – for example if you fall ill or are disabled in an accident. You also need to ensure that your baby will be well looked after in the event of your untimely death.

  • Dread disease cover: cancer, heart attacks and strokes are a hard and fast reality for all of us. If you fall victim to a serious illness your dread disease cover policy will pay out a lump sum of money which you can use to help pay basic living expenses and cover any medical expenses not paid by your medical aid.
  • Disability insurance: the financial compensation your family needs if you are ever disabled by illness or an accident and unable to work.
  • Life insurance: in the event of your death a life cover policy will provide the funds your family will need to replace your income and pay off all or some of your outstanding debt.

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