Sunday, April 28, 2013

Parenting 101: Are You Financially Ready?

Having watched a late-night investment show talking about preparing oneself to be financially ready for being parents, my husband and I decided to stay up to know what they had to say about smart parenting. They have actually mentioned a number of unanticipated costs when a child is born. Being the "OC" type of person that I am, I also had my own list of unanticipated costs. Combining both, here's the brief summary of costs that couples should prepare and be aware of when they are expecting to have a child soon:

Hiring a "yaya". As most couple nowadays do have work, it is necessary to have helpers at home to aid you in doing house chores. Caring for a baby on the other hand is different as you will need to hire somebody who is expert in this field which sometimes cost more than double than you usual helper.

Baby's necessities. Other than their basic food and diapers, babies grow quite fast in early years so you will really have to spend on their clothing. Here's my Tip: I suggest that you actually buy ordinary home clothes for your babies ("pambahay") and spend a bit more on their outfit when they're going out for a stroll. Remember, there are a lot of baby clothes are very cute but costs more than what adults wear.

Increased utility consumption at home. I remember a friend telling us that their electricity doubled when they had a child. This is due to the air-conditioning that had to be turned on most of the time, not to mention the fact that you have also added headcount, because you hired additional house-help. Recommendation: If you will be purchasing air-conditioning system for baby's room, try looking for the inverter-types. These might cost you more at initial purchase but you will see difference in your utility bill in the long run.

Necessary things for baby's growth and development. This includes check-ups, vitamins, vaccines that are needed by the baby to protect them from the many diseases that world has.

When the children grow older, there will be additional costs to be incurred such as (and not limited to) their education, tutoring, summer extracurricular activities, allowances, and the list goes on..

Since we don't have children yet, I know there are quite a number of unanticipated costs that I have missed, but  the question is, how do couples prepare for these things?

Start saving early. The moment both of you are married, it's best that both of you set aside an amount on a periodical (monthly/quarterly) basis to be allotted for the kids even before the child is born. I'd suggest to open a joint bank account and do automated monthly debits from a source account that you have to be moved to this account. In this way, you are forced to set aside an amount from your children. Since inflation is higher than the interest you earn from banks, explore on other financial products (mutual funds, bonds, etc) that would yield higher returns compared to just earning the normal interest in banks.

Spent less on things you don't really need. Having kids means sacrificing, and unless you are ready to let go of your material wants for the sake of your kids, you will never experience the feeling of how great it is to be a parent. If you have heaps of savings on the other hand, do learn how to set a limit on your spending as well because you don't know what the future holds. It is always good to keep some so when rainy day comes, you will have buffer.

Career-wise, if you think you need a job with a better pay to sustain your family, look for opportunities and don't be afraid to leave your comfort zone. You will never improve unless you explore the world around you.

Having a kid may be as easy but sustaining them is a different thing. May we also be reminded that more than the financial aspect, children are gifts by God to couples, so parents should do their best to raise God-fearing, responsible, loving children.

Have a blessed Sunday Everyone!

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