28 Aug 5 things to consider when growing your family
Making the decision to grow your family is life changing. Our clients that have lived through that phase tell us it was one of the busiest times of their lives – but also one of the happiest and most rewarding.
This stage of life is also one of the most influential in determining you and your family’s future financial fortunes. Whilst enjoying and really valuing this life stage should always be your first priority, in the busyness of this time don’t overlook these 5 key things:
Gain greater control with a budget
Money can feel like a transient asset, going out as fast as it comes in, often leaving you feeling out of control.
One of the best ways to gain more control is to work out what you spend on day-to-day life. Whilst the idea of doing this can seem scary and ignorance can feel like bliss (even the word ‘budget’ has some people breaking out in a cold sweat), we find it can be a process that proves extremely empowering. It naturally often makes people think through their values and for couples creates conversations they have perhaps never previously had. “What here in our budget is really truly important to us?” “What are the areas that we would like to be able to spend more on and to do so, what would we be willing to give up?”
Doing a budget not only gives people a greater sense of control and purpose to their cashflow, but it can help to plan. “How much room to move is there in our cashflow if we wanted to borrow an extra $200,000 to buy a bigger home?” “How many days a week would I have to return to work post maternity leave for cashflow to work?” These sort of questions can only be properly considered if you truly have an honest handle on your living expenses.
Protect your most valuable asset – you!
While some might say their most valuable asset is their car or home, the reality is for most young people their most valuable asset is their health and therefore their ability to work and earn an income.
Case in point: A 35-year-old earning $75,000 p.a. (+ super). Even ignoring inflation, based on a retirement age of 60 they will earn more than $2 million dollars in income throughout their working life. If serious illness, injury or even death were to occur, they and the family could potentially lose this entirely – a hole simply too big to fill for most young families.
We admit that insurance isn’t a stimulating topic, but insurance does buy piece of mind. Crucial protections like life cover and income protection can potentially be funded via super, freeing up valuable cashflow at a life stage where saving for or paying off a house is often the main priority.
Beware: not all covers are created equal. Most default covers setup in super funds reduce each year as we age, meaning the amount we would get paid in the event of an accident or death, falls considerably. Consult a qualified financial planner for advice around which types of policies suit your situation.
Education can be expensive – think ahead
Whether to send your children to public vs. private schools is a personal decision. However, if you’re a parent thinking of sending your child to a private school, you must plan out how you are going to fund their schooling now, not tomorrow.
It is common to have outlaid hundreds of thousands of dollars in educations costs throughout the school life of your children. Review the cost of sending your children to the school of your choice and consider how much money to set aside and where. Generally, there are much better options than a high interest bank account, which can make a big difference on the growth of your savings.
Weigh up your options and see a mortgage broker
If you have a mortgage, or are thinking about buying a home, review your options with a qualified mortgage broker. With access to a range of banks and financial institutions they can properly work out if you are getting the best deal possible for your situation.
Most mortgage brokers don’t charge for this so the worst thing that can happen is they can’t better what you have and you stick with your existing provider. But on the flipside, they may find you a better deal, which means potential savings on interest and other fees and charges.
Don’t neglect your super.
We spend a lot of time talking to new clients who wish desperately they had started thinking about their super earlier.
Paying attention to your super doesn’t just mean topping up your fund. In fact it’s often about engaging with an expert to look at your fund and review if there are cheaper funds available and if your fund is invested in a way relevant to your age and life stage. Making small changes now can make huge difference later.
Growing your family and need some financial guidance?