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Pregnancy and expecting a child brings with it an entire range of emotions from excitement and anticipation to severe anxiety. With the high cost of living today, more expectant parents are feeling anxious about the affordability of raising children. There is no questioning that the cost of raising children today is considerably high but it is possible to provide your children with what they need if you are prepared to plan. Planning for your child’s financial future needs to start as early as possible. Below are some baby-steps you can take to providing your little bundle of joy with a solid financial future:
How you allocate and spend your money is going to drastically change with the arrival of your little one. Even the line items of your budget will change to include things like ‘diapers’ and ‘formula’. Start your budget by listing all your sources of income. When listing your income, remember to any benefits you may be claiming such as UIF and how long it will take for the pay-outs to be received and ensure you are well aware of how pay-outs from your employer will work. You will then need to list all your expenses, which should include savings. While you are expecting, aim to save extra each month to cover any shortfall you may experience while on maternity leave. If you find yourself at a deficit, you will need to review your budget and be ruthless in excluding unnecessary expenses- this may be tough, but it will be the only way to alleviate financial pressure in the long-term. If you have a surplus, consider investing the money in options, such as a Fundisa fund, for your child’s future educational needs.
One of the major expenses incurred when raising children is education. Every parent wants to ensure their child has the best education possible, but this does cost. Start now by exploring different investment and savings options available to you. Some options that you may want to consider include unit trusts, education-specific policies and investment options. For households earning under R180 000 per annum, the Fundisa fund is an option. The Fundisa Fund is an educational savings account that rewards savings efforts with a unique bonus. Every year your savings are enhanced by an additional 25% to a maximum of R600 per year. The bonus is added to your savings annually. Shop around for what best suits your needs and goals, but the important thing is that you start as soon as possible.
With such responsibility and so many financial products to choose from, it is vital that you get reliable and authentic advice in order for you to make an informed decision. Please use a service provider authorised by the Financial Services Board (FSB) when seeking financial advice or when doing your financial planning. Your family and friends might have your best interest at heart, but may not have the necessary financial savvy to advise you appropriately. Dealing with an authorised Financial Services Provider (FSPs) ensures that the FSP has met certain requirements set by the FSB, which will ensure that you receive proper financial advice and that you are provided with sufficient information to make informed investment decisions. It will also give you the assurance that you are dealing with fit and proper financial services providers. More importantly, it ensures that you have a mechanism of recourse available to you should you feel that the FSP has not handled your money matters appropriately. If you choose to deal with unauthorised service providers, the FSB may not be in a position to assist you should you something go wrong. When dealing with an FSP, ask for the FSP number- all authorised FSPs must have one. You may also contact the FSB call centre on 0800 202 087/ 0800 110 443 or check on www.fsb.co.za to verify if an FSP is authorised.
For more information relating to the content of this article, including a budget template, information on dealing with FSPs and additional resources such as brochures, booklets, calculators and contact details, please visit the FSB’s financial education website www.mylifemymoney.co.za
Written by Tammy PeyperManager: Consumer Education Department, Financial Services Board