So I hear you're having a baby.
If you've recently discovered that you're expecting an addition to the family, get used to hearing that from all your family and friends. They'll call to congratulate you. They'll call to offer their support. They'll call to ask how you're feeling.
But most of all, they'll call to tell you how much your life is about to change. Keep in mind, however, that having a baby is like any other major change in that planning ahead makes the transition a lot easier.
In planning your personal finances for the baby's arrival, there are several issues you need to consider. It's time to get out a pen and paper and work out a budget that you can use once you've brought the baby home. Remember, these figures are in addition to your regular weekly and monthly bills.
First of all, a new baby means an extra mouth to feed, as well as diapers and baby clothes. Also, you'll find that miscellaneous expenses, including paper towels, tissue, and detergent, will all increase. Even your utility bills will go up because you're home more often. You're probably safe if you figure a minimum of an extra $200 a month, although you may have to make some adjustments in either direction as time goes on.Additionally, there are some one-time purchases you might want to consider, including a crib, car seat, monitor, and baby swing. Of course, many expectant mothers receive these as gifts at a baby shower.
If both parents plan to work after the baby is born, start calling daycare centers as early as possible, just in case you have to get on a waiting list. Daycare costs can range from $40 a week for a program in someone's home, to $125 a week or more for an established center. Ask friends who have children to recommend a good center, and call the state agency that regulates daycare centers to get their rating. Just don't delay. It's important that you plan for this new weekly cost in your budget.
Another important area for your post-birth budgeting is health care. How much will your health insurance premium increase by adding the baby? Make sure you discuss this with your employer to find out what the family rate is, and specifically, how much more will be taken from your paycheck every week.
Once the baby is born, you can plan on an occasional visit to the pediatrician, both for regular check-ups and minor illnesses. Some parents get very lucky and experience very few health problems with their newborn, beyond the minor colds and infections all babies get. Other infants need more attention from their pediatrician. So, it's really very difficult to carve that number into stone. However, depending on your deductible or copayment, you may need to budget an additional $200 to $300 a month just for the baby's medical care, at least for the first few months.
Now for the good news.
Almost every expectant parent, especially those expecting their first child, worries about money. Most discover after the baby is born, though, that it isn't as hard as they thought.
Having a baby forces certain changes onto the parents, typically resulting in a less expensive lifestyle. You don't go out as often for dinner or to a movie. If you think about it, people who don't have children waste a lot of money filling time and avoiding boredom. Rest assured: you'll have no problem finding something to do once the baby arrives.
Sunday, June 15, 2008
Baby budget: Financial Planning Is Key When Having A Baby
Monday, June 9, 2008
7 Common Money Mistakes To Avoid: Part I
“I have been working for 20 years, yet I have very little cash in my savings. Sometimes I wonder where all of my money have gone to”
Does the above statement sound familiar? If you ask around, you are sure to find at least one person you know, who share the same sentiments as Mrs. Chong.
If you are thinking of improving your financial health, first, you need to be able to recognize your financial mistakes so that you can learn not to repeat them.
Here are some commonly made money mistakes that everyone should avoid:
Mistake #1: Failing to Plan
If we carry out a survey on the people around us, we would be sure to find that not many of us plan our finances. The most common response that we can anticipate would be the classic excuse “We are just too busy with work and family that we hardly have any time left to do the planning”. As a result, most of us end up paying higher taxes, leave our savings sitting silently in lousy investments for years or overpaying for financial products. Since there are always deadlines to be met at work, we tend to let our finances run its own course, thinking that it is of lower priority as there are no deadlines to meet nor is there anyone to force us to look into our financial plans, unless of course we run into serious deficit.
However, the important point to note here is that PLANNING is typically found to be a strong habit among people who have successfully accumulated wealth, even with just a modest income.
Mistake #2: Spending Beyond Our Means
Nowadays, we constantly overspend due to peer pressure and consumer temptation that surround us on a daily basis . We are, to a certain extent, exposed to mild brainwashing with TV commercials, newspaper ads, sale circulars, and flashy shopping malls promoting the lifestyles adopted by the rich and famous, which of course involves having the latest mobile phone models, the latest luxurious cars, latest fashion trend. All these tempt us into spending exorbitantly and unnecessarily. The signals we get from not jumping on the bandwagon is that we will be considered left out of today’s scene. However, in order to do so, far too often, we end up spending way beyond our means. We will find that at the end of each month, the net salaries that go into our bank account are usually meagre, after servicing our car loans, housing loans, credit card bills and other utility bills.
Mistake #3: Spending Future Money
Buy now and pay later! This has become a norm nowadays and the credit card has become a must-have item in our wallet. In fact, a lot of us carry more than one in our wallets. No doubt of it is a convenient item to have around, however, some of us misuse it and treat it like a vehicle to spend our future money at will. It has become a common phenomenon where, by just settling the minimum payment at the end of the month, you will buy more now. As a result, the credit card bad debt snow-balls to an extent beyond our control. According to the bankruptcy report, the percentage of people declared bankrupt due to default in credit card payment has increased in the last few years especially among the younger age group. Be wise when using credit card. Making minimum monthly payment on credit card debt allows you to buy more now, but it will cost you dearly in the future.
7 Common Money Mistakes To Avoid: Part II
Mistake #4: Delaying Saving for Retirement
Most of us aim to take up early retirement. In order to achieve this, we need to plan our finances to make sure that we have enough savings to sustain the life style that we desire even after retirement. However, many of us find that even when we approach retirement, we still struggle to meet the savings target that we have set for ourselves earlier. As our income grows, our savings are supposed to increase as well, instead, we more often than not, have big items to spend on, i.e. house upgrading, new car purchase, club membership to keep up with our peers, etc., that prevents us from depositing more into our savings.
Mistake # 5: Investing in the Wrong Products
There are various kinds of financial products in the market. However, in order for us to identify the right product that suits our risk and return profile, we need to equip ourselves with some basic investment knowledge and do the homework ourselves. Instead, most of us end up investing in some products, simply because we rely too much on the financial advisers, who might have the agenda of pushing higher sales for their products and therefore providing misleading information to us. It is always important to study the product characteristics or the management team track record before investing.
Mistake #6: Not Saving for a Rainy Day
Some of us think that purchasing insurance is a waste of money. However, we are vulnerable if we and our family do not have insurance to cater for any loss of income. In the event of some unfortunate incident, especially those affecting the family’s bread winner, without any cash reserve or insurance, it will be devastating to the whole family. By then, it would be too late to start thinking of income replacement.
Mistake #7: Focusing Too Much on Money Matters
All the above tell us to focus on our finances. However, on the other extreme, we must also not be too engrossed in accumulating our wealth to the extent that we lose sight of other priorities in our lives. While we plan our financial health, we must not neglect our own health, family and friends, career satisfaction and fulfilling interests. Without these, even with tons of money, we will not be happy.
Lastly, we need remind ourselves of the importance of planning our finances. If we are not fully, totally and truly committed to creating wealth, chances are wealth will remain estranged to us
