Nothing wakes you up like an addition to the family. Bringing a life into the world, whether planned or not, really brings adulting to a whole new level. Just getting the idea to sit still in my mind has already sent me into all kinds of swoons and dizzy spells. Which is ironic, because as a financial adviser, I have planned and advised dozens of clients for this exact scenario. But when it is finally my turn (our daughter arrives at the end of the year), the reality just hits like a tonne of bricks. Please allow me to share some thoughts.
- Stories about pregnancy complications and congenital diseases hit home much harder than I could have anticipated. It doesn’t matter whether it affects the child and/or the mother, these incidents are serious, unwelcome, and worrisome. If it happens, I will have to rely on teams of specialist medical practitioners to get us through it. But what I can help to control is the financing. What I did was to purchase a pure maternity protection plan, instead of a bundled product. The reason for this is because I ONLY need something to help offset the potential healthcare costs. Nothing more. In fact, Timothy from Dollars And Sense wrote an excellent piece on the difference between the two. You can find the link to that story here.Next, I will be getting a good hospitalisation and surgical (H&S) plan for our daughter when she is born. Additionally, we will be applying for an integrated shield plan and rider to complement MediShield Life with it as well. These are simple steps available to everyone. And as a new parent, it’s best to arm ourselves with it just in case something happens.
- My YOLO days are over – I am responsible for the future of my family – dead, sick or alive. This is where insurance plays a pivotal role. The purpose of insurance is to protect against a potential loss of income in the event of an unfortunate demise, major illness or disability. No one can guarantee we have immunity from that. We want to leave behind enough to pay for future living expenses and big-ticket items like our daughter’s tertiary education (it will be the best that we can provide), and one another’s retirement. The family cannot be completely unprotected just in case I and/or my wife don’t see another sunrise this lifetime. As such, we opted to get a term plan as this fulfils our requirements and is the cheapest class of products that does so with a minimum of fuss. We will also be getting our wills and CPF nominations done as soon as our daughter is born. Our affairs will truly be in order, just in case the worst happens.
- Time will be a luxury once our daughter arrives and finances will need to be automated as much as possible. Priorities will definitely be sorted. I’m an avid gardener, and I love my plants. But you better believe that if I have to choose between looking after one or the other, my little girl is going to win every time. By the same token, with her taking up all our attention, we’ve set into motion mechanics to automate the transfer of funds, which will apportion our salaries into a joint household account, as well as some into an investment fund directed at our eventual retirement. We’ve also set up GIRO accounts to handle regular periodic payments so as to avoid any late payments (and penalties). By removing the need to micro manage our finances, I’ve effectively bought us more time to spend on the important things in life. Or people, in this instance. The plants will just have to suffer.
- Now I can understand how easy parents can “under save” for their own retirement. It is only natural that I want to provide the best for our daughter and my wife. But the best things in life, are not always the cheapest things. I have to expect that there will be substantial costs. With the advent of social media, there is significant pressure in “keeping up with the Joneses”. Be that as it may, we have pledged ourselves towards investing everything that we can to achieve the quality of life that our daughter deserves, and have our family as financially free as possible. This is a commitment that my wife and I take seriously, as we have seen how being under prepared can really lead to some very tough choices later in life.
- We want to give ourselves the option of having my wife stay at home or work part-time when our daughter starts schooling, an experience that comes once in everyone’s life. But the reality is that to achieve that, we must successfully transit from a dual income home, to a single income home. That means we will need a lot of help, and the most logical way of getting that help is to have our savings contribute to the income streams via good, solid investments. Of course, we will be managing our expenses as well by keeping our standards of living in check, and being sensible with our lifestyles, all while keeping an eye on our retirement fund too!
But most of all, we are both breathless with anticipation at the arrival of our daughter. I have promised everyone that I won’t spoil her rotten. And I’ll have to rely on you all to help keep me honest there. Albeit having planned the finances with the addition of our baby girl down to the very last detail, we understand and acknowledge that things may change. However, making sure that everything has been planned and being careful about the details is just something that every parent has had to do since the beginning of time. And now, it’s my turn.
This is an original article written by Loh Yong Cheng, Client Adviser at Providend, Singapore’s Fee-only Retirement Financial Adviser.