Firstly, congratulations if you are expecting. We know that there are much more important things to consider than organising your financial situation when you are pregnant. But we also know that being financially organised will make a big difference during this time.
I think this is an interesting topic. One of our co-founders is going through this phase in life right now. It’s a wonderful time when you are expecting to be a mom or a dad for the first, second or even third time. Some of us are much savvier than others and plan for 12 to 24 months ahead. It’s up to you and your current situation to decide on how much planning you want to do.
During this time you will be given a lot of advice, because everyone thinks that they are experts. We thought it was important to share a realistic view about what you probably should consider to ease the financial stress and enjoy the experience.
Change in household income
Financially the first thing you will have to plan is to adjust your lifestyle to a one income family. This makes a big difference. Take the time to understand your work entitlements and research government grants as well as any entitlements you qualify for during this time. So that you are ahead of the game. Any financial help at this stage will be valuable.
Understand your current expenses
Understand your income and some of the current and future expenses. Go through 3 bank statements and know your recurring expenses.
What you are looking for here are some expenses you can chop or reduce. Question and challenge some expenses. Here are some examples which our customers had cut and reduced- Gym membership – Consider chopping- Newspapers and Magazine – Consider chopping- Online gaming – Consider chopping- Utilities – Consider switching and savings. Some companies have a fixed rate offer now- Annual fee on banking products – Consider reducing- Software membership – If not needed, consider cutting- Phone plan – Considering reducing the price, ask for a loyalty discount
Revisit anything and everything that is reoccurring in your bank statements.
Budget and start saving
Plan and budget ahead. It will be good practice to start living on one income from the beginning, so you are able to experience the limitations.
There are plenty of budgeting apps (some are free) to download and use. Using one will help you track your weekly expenditure and to determine your financial position and cash flow, as well as to analyse some of your biggest expenses such as you’re the takeaway lunches!
Also at this stage, it will be wise to understand who will be in charge of the household budget. We know a friend who is about to become a dad and who had a fair bit of credit card debt. Since giving his wife the title of “house treasurer,” she had turned the family budget which was in deficit to a surplus in a very short period.
Shopping for baby products
This is truly an important time in your life. Naturally you want to start spending on setting up your house to be baby proof and purchase goods for the arrival of your baby. Make a list and take the time to research costs. Don’t be impulsive. There are options to hire certain baby goods such as car seats and cots etc. so consider alternative options to making an outright purchase.
Tackle your home loan
For some of you, the home loan is the biggest expense in your budget. There are a few tricks we know of that will help you tackle this expense.
1. Fix your loan
This will help provide you with certainty. Your budget won’t blow up if the rates go up. You can lock in for a period between 1-5 years.
2. Refinance your loan
It’s best to refinance your loan at the earliest stage if you are expecting. Why? Because later on when you are on parental leave the banks will only consider one income when calculating the home loan serviceability. Also having a dependant will impact your overall serviceability.
These are some of the basic tips we have discovered having spoken to a few of our customers who had been through the journey.
Remember that at LoanDolphin we can help you take the pain out of shopping around for home loan rates and negotiating with different parties. You can find a better home loan rate tailored to you with us.
We helped one customer save over $5,000 per year through our open and unbiased auction platform.
Imagine what this could mean to your family and the budget?
Disclaimer: This blog post has not taken into account your objectives, financial situation or needs. Due to this, before acting on any general advice/information in this communication, you should consider whether it is appropriate to your objectives, financial situation or needs.