Phil Thompson

Phil Thompson & Thompson Financial Services

I still remember when Kate, my wife, and I found out we were pregnant with our first baby. We had been back in Australia for only a few months after our five month backpacking trip throughout South East Asia.

We were only 23, had no money, renting and had both just started working full time again.  The two of us, could not have been any more excited about the upcoming arrival of our baby.

The news of a new baby can put you into a whirlwind of things to consider. For the majority of my clients, and especially for Kate and me, it boiled down to these questions.

“How am I going to keep this human thingy alive?”

“Will we be able to keep our current lifestyle when the baby comes?”

“How in the world are we going to afford this?”

The ‘how can we afford this’ question isn’t just asked by those crazy people who decide to start having kids when they are 23 years old with no money. Almost all expectant parents find themselves asking the same question. It is by far one of the biggest concerns for expecting parents but it presents an opportunity to take a step back and begin to get all your finances in order.

Here are 3 of the most important things to prepare yourself financially before having kids.

1.    Get Yourself Covered

Before kids Kate and I use to joke around that if something was to happen to one of us then we could easily get re married, as we’re still quiet young. But as soon as we had children we suddenly became a lot less attractive to potential suitors.

Now this is obviously a morbid joke but its true that once you begin to have children it isn’t a matter of ‘she’ll be right’ anymore. All of a sudden it became very important to make sure that we were looking after each other and our children especially if something horrible was to happen.

We made sure we both had enough personal insurance cover that should one of us pass away, become permanently injured or suffer a traumatic event we have the option to stop working; providing us the freedom to raise our kids without any financial concern. Having appropriate insurance in place really does give us a comfort and assurance that we can physically and emotionally be there for our girls if the worst was to happen.

2.    Understand Your Money

I often find for myself and my clients that it is only when your income reduces do you then think about how you can reduce your spending. Fortunately when you’re preparing for children you have a set date as to when your income will reduce giving you the ability to start preparing for it.

The issue when you’re preparing for children is that your financial future is not as certain as it once was and planning ahead can prove to be difficult. Will you want more than one child? How far apart will you (can you) have children? Who is going to be the main carer? Will you start child care and if so, when? The list goes on and on.

That is why it is important to use the time prior to the baby arriving and you finish working to work out exactly where your money is spent. Only then can answer the question of ‘how can we afford to do this’ with confidence.

3.    What Are You Entitled Too?

As Joe Hockey once said as Treasurer, we live in the ‘age of entitlement’. Mr Hockey was making a political statement about ‘middle class welfare’, however, whatever the point, when you are preparing for your first born you should find out what you’re entitled to. You could be eligible to receive benefits, rebates, leave, support, supplements or bonuses that are available through Centrelink and your employer; all designed to support you with the cost of having and raising children.

Centrelink benefits are dependent on many factors, such as how many children you have, the children’s age and your income. There are many different types of benefits that you are eligible to receive. Centrelink have made it simple to work out what payments you may be eligible for with the ‘Payment Finder’* section on their website.  

Expecting your first child is one of the most exciting times of your life. It’s important to make sure you’re doing regular health checks, getting parenting advice, preparing for the birth and setting up the baby room. It is just as important to make sure that you’re financially prepared for starting your family.

Don’t be tempted to put preparing financially to start a family into the too hard basket; you just need to do it! Remember prolific beats perfect.

 

Thompson Financial Planning
Phil Thompson is a young driven entrepreneur who constantly provides high quality financial solutions for his clients. Prior to working in Financial Services Phil was one of Australia's best performing acrobats which lead him to perform throughout Australia and the World. Phil became the best at what he did due to smart goal setting (short and long term), a disciplined approach, hard work, self belief and great coaching, all of which are things Phil uses with his clients and to run his business everyday.