There’s nothing in this world quite like preparing for a new arrival. Not only are you working to a firm deadline – possibly the most anticipated deadline you’ll ever have – but you’re also suddenly juggling a thousand brand new concerns, questions, hopes, fears, daydreams and calls on your evermore-limited time.
A new pregnancy is also a great incentive to get a firmer hold on the practicalities – none more so than your finances. Not only will a new baby represent its own little (but powerful) drain on your current accounts, but the host of responsibilities a new parent has to take on in an instant can cause stress levels to skyrocket. Without strong financial advice and a realistic, long-term financial plan, this stress can consume what should be a happy and exciting time.
In fact, in 2018, the HuffPost reported that 25% of new parents are ‘intensely worried’ about money. Now, with new pressures from high inflation and the cost-of-living crisis, it’s inevitable that more and more parents-to-be are going to be losing sleep to endless questions and worst-case scenarios.
The good news is that facing the problem, however uncomfortable it may feel in the moment, is infinitely better than avoiding it – or only ever letting it take over your thoughts at 2am. Here’s what you need to know.
It’s about peace of mind as much as it is practicality
A new baby throws everything up in the air – your sleep, hobbies, work, free time, social life and, most importantly of all, your emotions. When everything is running high, you certainly don’t need one of the biggest potential sources of stress – money – to stake its own claim on your sanity.
1 in 4 UK workers have lost sleep as a result of fears over money. But it’s not just about waking up with bags under your eyes, which is par for the course when there’s a new baby in the house. Almost 60% of employees say that money worries are affecting their performances at work and keeping them from doing their best.
And, when you’re getting used to the idea of having someone who is totally dependent on you and your ability to keep things afloat, those worries are amplified.
Taking a long, frank look at your finances with the help of an experienced and independent financial advisor is the best way to curb those fears and stop them from impacting your work and personal life.
It’s about protecting your long-term plans…
Having a baby can put the emphasis on the immediate future – like, how you’re going to manage to get in the shower before midday, when the next feed will be, and how you’re going to drink your tea before it gets cold without waking the baby.
It’s all perfectly normal, but you don’t want to take your attention off the long-term for too long. Time flies, and knowing that you’re consistently working towards your long-term goals and plans – whether they are for building up your savings for something specific, like university payments, your retirement plan, or building up an investment portfolio.
…And protecting yourself against the ‘what ifs’
We should all be taking steps to proactively protect our finances, at whatever stage of life we happen to be. Ensuring that the money we depend on each month won’t be disrupted if a worst-case scenario hits is inarguably the very best way to achieve that peace of mind you need right now.
What happens if you’re injured or become ill and can no longer work at the same capacity? What necessities depend on your monthly or yearly income? How many safeguards are in place for your loved ones if the worst should happen?
From income insurance or critical illness cover to a life insurance policy that ensures your family won’t be left in a precarious financial situation should you pass away unexpectedly, understanding how and why you need to protect your money is a key part of any good financial plan.
It’s not always easy to think about the worst-case scenarios. Most of us would rather push them to the very backs of our minds, but the abstract worry will always be there – not to mention a very real risk to your family unit.
It’s about looking forward to the future
Looking at your finances doesn’t need to be solely about ‘what if this’ and ‘what if that’ – the doom and gloom of various question marks hanging over the future.
If the short- and long-term outlook for your money are no longer pressing concerns, then it will be a lot easier for you to look ahead to all the positives the future can and will bring.
Negative bias is a very real and common experience, and most of us know how it feels to want to be able to feel excitement and enthusiasm, only for those emotions to be overwhelmed by the doom and gloom.
‘I’d like to be able to take the family on yearly holidays, but we probably won’t be able to save enough.’
Unknowns are like fuel to the fire when it comes to giving our negative bias power. Taking practical steps to cut down on the number of unknowns in our futures is a great way to reduce negative bias and really enable ourselves to look forward to the years to come.
It’s about freeing-up your time
On-the-fly budgeting takes up a lot of time. Who wants to have to devote half the weekend to re-jigging the finances, pouring over spreadsheets and scrolling back through bank statements to try to regain that elusive sense of control when things start to feel like they’re spiralling?
A new baby is the perfect excuse to cut down on those unnecessary calls on your time and ensure that, when you’re at home, you don’t need to feel pulled in every direction. Instead, you can focus on home life and being as present as you can be.
It will encourage you to get other important considerations in order
The practicalities are rarely the first things we want to think about, but getting a grip on one can have the positive effect of making us more ready and willing to get a grip on another.
When you’re looking at ways to secure your loved ones’ futures in case the worst happens, then you’ve got the perfect incentive to think about what other plans you can put in place.
While estate planning and writing your will may feel like considerations that can be put on the back shelf for years – if not decades – there really is no ideal age at which to start thinking about these things. Anyone over the age of 18 can write a will and, while it’s another reason to think about things we’d all rather avoid thinking about, regularly visiting with a solicitor to draft a will that reflects your circumstances (including what property or high-value assets you have, what investments you’ve made, and who you wish to pass these things along to).
It will encourage you to stay away from unnecessary debt
Preparing for a newborn inevitably means spending money. Research suggests that around 90% of parents admit to overspending on supplies for their baby, with an average overspend of more than £5,500.
It’s understandable why we’re all so guilty of overspending, but it’s always a good idea to balance that enthusiasm for overpreparation against a more realistic, economical approach.
It’s never a good idea to take on unnecessary debt, especially when life is about to go up in the air (and never really come all the way back down again). If you’re taking a less structured approach to your finances, then small debts here and there in the form of store credit accounts and buy-now-pay-later schemes don’t tend to feel like a big deal.
If, on the other hand, you’ve devised a clear and productive financial plan that enables you to work steadily toward your goals, it’s easier to stay in that mindset and exercise a more discerning approach to supposedly small debts.
You can make your money go further
If you haven’t worked with a financial advisor before, then there’s a strong chance that you are unknowingly wasting opportunities to make your savings go a lot further. We can all take steps to boost the money we have leftover at the end of the month, but, without the right guidance, that money and time can easily be wasted.
At Perennial Wealth, we can help you to build an investment portfolio that is tailored to your situation, goals, and risk profile. That way, money that is ‘put away for a rainy day’ has the opportunity to grow and support your long-term aims.
We offer guidance and practical advice, and insight to people at all different stages in their life, ensuring that their finances are in the best possible position to support any changes (or additions) that come their way. Get in touch to find out more about how we can help you.