1. Lack of planning.
Consider the adjustments that will need to be made to your financial arrangements and lifestyle once your two incomes are reduced to one.
“The birth of a new baby is an exciting time, but it will come with its challenges as the family unit adjusts to changes to the household and family unit, including income. This is an area the parents can sit down to discuss future requirements, and any adjustments which may be required. It is also important to discuss how long the reduced income will be a factor.”
“Try to live off one income prior to having actual reduced income. This will assist in adjusting to a new weekly budget, and the surplus funds can be saved for future requirements.”
2. Not seeking professional financial help.
“Seek professional help – it is always a good idea to have another professional party to review your financial position. For instance, a good finance broker will sit down with you and take into consideration your future position and requirements. It may be a case of simply switching to a fixed rate which fits within your budget - this will safeguard against increased mortgage repayments – or to consolidate debt to improve cash flow.”
“Failure to take additional safeguard measures means added strain. Investing in a high return term deposit to generate additional income will thereby reduce the full impact of losing an income.”
3. Failure to review the household budget and make adjustments in spending and lifestyle.
“Consider the length of time you will be living with a single income and adjust costs, spending and savings accordingly. This would also include any adjustments in loan and mortgage repayments but, again, seek professional financial advice. Repayments should not be reduced to interest only as you still want to see your loans and mortgage decreasing whenever possible.”
“Draft or review your budget – this area always assists as it allows you to determine your new household income against outgoings. See if there are any areas where expenses can be reduced to assist with a reduction in income.”
“Families need to be financially proactive. They should review their family budget well before the baby arrives so they can best understand their position after the arrival of their baby.”
4. Not taking into account all expected expenses.
“Expecting parents should consider both consumables and non-consumables cost ie nappy costs build up very quickly, purchasing change tables and prams etc.”
“The cost of babies adds up quickly and not knowing how to deal with resulting budget pressure can put a huge strain on families.”
“Don't put unnecessary strain on your reduced income by making unessential purchases, such as a new car, or extravagant baby goods expenses where a cheaper option is just as good. Do your research, purchase sensibly and don't purchase unnecessary items. Short term rental of items only needed for a short time, such as a capsule and bassinet, is an excellent option which enables reduced outlay on needed purchases for a small cost.”
5. Lack of future planning for education expenses.
“The earlier an education savings plan can be instigated, the greater the return. This also reduces any stress impact and doubles as a fall-back savings plan, should any other unexpected expenses arrive, such as medical. Again, a term deposit is a great option here and offsets reduced income revenue.”
“Budget early to maintain accruing savings for future investment.”
Assist Finance has been operating for over 50 years. www.assistfinance.com.au
Level 3, 333 King William Street, Adelaide, S.A. 5000
Ph. 1800 300 101