Financial Planning for Parenthood

Dec 1, 2021 | Wealth

Becoming a parent is an exciting time of adjustment and upheaval; how could such a little person create so many changes – and sleepless nights?

But lack of sleep shouldn’t be caused by financial worries and reduced household income.

When Judy a florist, and Gary an IT manager, decided to start a family, like everyone, they worried about the impact on their finances.

They tried to save as much money as they could while they still had Judy’s income, but there was so much to buy and prepare.

Further, they were concerned over the negative long-term impact to Judy’s superannuation while on maternity leave, particularly as the couple planned more children.

According to a report by Treasury.gov.au, Australian women retire with almost 30% less superannuation than men, due to:

  • losing income through maternity and child-caring responsibilities,
  • fewer promotion and higher paying job opportunities, seemingly due to maternity and child-caring responsibilities.

Judy and Gary decided to seek professional advice to help them maximise their savings potential while they still had two incomes, and to help them manage their expenses once Judy began maternity leave.

On Gary’s mother’s recommendation, they met a financial planner who expressed how beneficial it was that they came to see him while Judy was still working.

The adviser reviewed their situation, income and expenses, plans to expand their family, and their long-term goals. He helped them create a budget that focussed on debt and unnecessary spending, then structured a savings plan to provide cash for emergencies.

Additionally, they recommended the couple consider:

  • updating their health and life insurances.
  • their entitlement to government support, e.g., Family Tax Benefit, Childcare subsidies etc.
  • the government’s Co-contribution scheme, where the government makes a one-off contribution to Judy’s complying fund, if she meets certain criteria.
  • consolidate any small super funds so they each maintain only one fund. This can reduce fees and help manage their retirement savings.
  • undertaking regular portfolio reviews, with assistance from their adviser, to ensure their strategy continues to meet their needs.

After months of preparation, Judy started her planned 12 month maternity leave so she and baby Ally could spend Ally’s first year together.

After a couple of months, Judy spoke to Michelle, her boss, about part-time work Judy could do from home.

Michelle thought it was a terrific idea and suggested Judy manage the store’s ordering system, handling sales, customer enquiries and delivery services. In today’s online environment, it wasn’t difficult to set up.

This helped Michelle with staff rostering, while paving the way for Judy’s eventual return to full-time work.

Through tailored advice, Judy and Gary were better prepared for the changes in their lifestyle, while taking steps to protect future wealth. Through discussions with her boss, Judy could care for the newest family member, while contributing to household income, and her super!

In recent years, the spotlight has been turned on gender pay and superannuation gaps, resulting in greater awareness of women’s financial issues.

Accordingly, financial advisers work closely with women, and young families. These are often people who mistakenly believe that financial advice is only for the wealthy, or that it’s not possible to build wealth when you’re younger, on a lower wage and with other priorities.

Fact is, the earlier a savings strategy is implemented the better. And that strategy will need to be reviewed and altered from time-to-time as lifestyle and priorities shift.

So, regardless of your financial position, your family plans, and your future goals, a professional savings strategy will support you through each stage of your life.

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Financial Advice services are provided by Insight Financial Partners Pty Ltd T/A Insight Wealth Perth as a Corporate Authorised Representative of
Australian Unity Personal Financial Services Limited (ABN 26 098 725 145), AFS Licence no. 234459.

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