3 Financial Moves That Every New Parent Should Make
If you are a first time parent, some of you might be brimming with excitement at the prospect of raising up your child. However, know that your financial life is about to shift, and it is important that you pay attention to it. Failure to do so can be disastrous and can cause unnecessary stress for you and your family.
Here are 3 crucial financial moves that you should start looking into immediately.
#1 Insurance Policies Review
Its common for people to do lots of research about insurance when they first start to work, and then not think about it for years to come. However, with a new dependent, it goes without saying that there comes additional expenses and savings required within the household, and hence it is a crucial time for you to look into reviewing and updating your existing insurance coverage and financial portfolio.
If you don’t have a life insurance policy before having your kid, it should be the first thing to look into. Life insurance policies provide coverage for the event of death, disability and critical illness, and as such would be able to protect you and your family in the unfortunate event you are unable to work as a result. Often, the presence or absence of life insurance during said unfortunate events would mean whether the family can continue to maintain their standard of living, or end up struggling financially. Ensure that you get covered adequately for your family and according to the income that you bring in.
In addition, ensure that your child gets covered under medical insurance. While your kid is unlikely to be at risk for medical emergencies, but it would be prudent to take precaution through medical insurance to ensure that you are not bankrupt should they arise.
As Benjamin Franklin once said “By failing to prepare, you are preparing to fail”. Make the insurance portfolio review a top priority the moment your kid is born.
#2 Open a Child Development Account (CDA)
Baby bonus is something that everybody knows in Singapore, but not everyone knows that you have to prepare for it too. You can open a Child Development Account (CDA) and deposit money into it. The government will then match dollar to dollar the amount of money your have put into the CDA account.
To open one, simply just complete the application and paperwork for a CDA account, which you can start doing so 8 weeks before the birth of your child. You can choose to open at DBS, OCBC or UOB bank. They differ slightly in interest rates and perks, so do your due diligence and decide which bank is more suitable to your needs. (You can refer to our IG post on different CDA accounts at @moneyparentsg for a breakdown too).
Make sure you deposit the amount that you can possibly get from the Government to maximize the amount you get.
#3 Picking a Guardian and Will Writing
This is something that is not often given as an advice as it sounds morbid and it is very often overlooked as your kid is just born. However, it is better to be safe than sorry. While you have a spouse, don’t assume that he/she will be there to look after your kid. Don’t take it for granted that intestacy law can handle your money for you either as the law can cause complications and delay the support your kid needs in unique situations.
You cannot leave your children’s life up to chance just because of laziness or unwillingness to set up a will. Writing a will can be one of the most responsible thing to do as a parent to ensure that your kid has a guardian and taken care of when you are no longer around anymore.
Source: https://www.moneyparentsg.com/post/3-financial-moves-that-every-new-parent-should-make
