Part 1: First things first
If you thought the wedding business was big business, you aint see nothing yet! Because this time, when anyone markets anything pertaining to your future or embedded offspring, they have two all-powerful tools they can, and do, wield: the guilt card (any good mother would know/do/buy) and the lack of and/or overwhelming desire to sleep card. Oh, and if that’s not enough – most things related to baby are just ridiculously cute.
I know. I get it. I am there. It’s 3:27am on a Friday morning and I’m writing about the baby business and how it pertains to our personal finances because my baby and my toddler are not that keen on me sleeping tonight. And if you’re new to this, I can tell you that when dad’s away, kids smell weakness.
So how does this pertain to your bottom line? How do you make sure you do what’s best for the baby and best for your budget? Well firstly, you prioritise. And no, I’m not talking about whether to buy the cot first or the pram – I’m talking about the MOST important things you need to have in place before baby arrives: a will and life cover.
Why do I need a will?
If you or your partner dies without leaving a Will then your Estate would be distributed according to the laws of intestate succession. This means that your assets may not be distributed as you would have chosen. For example, if you own property worth more than R125, 000 the State would split that property between your spouse and your dependant(s). This means that your spouse would be forced to move, in order to pay out the appropriate value of your estate to your child. The only way to ensure your family is taken care of the way you’d like them to be, if you were to die, is to have a Will of your own. And in case you didn’t know – you can have a Will drawn up for you by a professional for FREE through the Truth About Money. Now you really have NO excuse not to get this sorted today!
Life cover? What’s that?
Also known as life insurance, life cover is an insurance policy that you pay for, on a monthly basis, so that if your spouse dies – you would be paid out a lump sum of money. Why is this SO important when you have kids? Because although you may well have been able to fend for yourself if your partner died, everything changes once you have a dependant. That word itself is key – children are financially dependent on you for everything: food, clothing, education and everything else in between. So the idea is that you would take the life insurance pay-out you received to pay off debt and/or invest so as to provide you with a monthly income to maintain your current standard of living after your partner were not around.
So if you haven’t got these two items sorted yet, please PROMISE me that you’ll do that long before you even think about buying anything else for your baby. Because trust me – once your little one arrives you don’t want anything other than a hungry baby keeping you up at night.
Author: Hayley Parry – Money Coach, The Money School