Becoming a mother is a huge life transformation. You can not only deal with physical and emotional changes, but also financial changes. So if you are expecting your first child, it is not uncommon to experience a mixture of excitement and terror!
But do not worry. In honor of Mother’s Day, we’re exploring how being a mother can affect your finances – and what you can do to prepare.
You are now financially responsible for someone else
If you don’t have parents or other loved ones who are relying on you, having a new child could mean being financially responsible for someone else for the first time. You may need to make some lifestyle changes:
- Start budgeting. For starters, you can try to track your spending for a few months. This helps you visualize where your money is going and how much you can afford to spend on children’s expenses. For example, do you spend more on dining out or for entertainment? Then you can adjust your budget to make room for new expenses.
- Find ways to save. To make room in your budget, you may need to increase your savings. This could mean spending less on non-essential things like entertainment and dining out. You can also find ways to cut down on living costs, like using pre-loved baby items (good for your budget. and environment!), taking advantage of promotions and being a wise cashback
- Spend less on yourself. Unless you find ways to increase your income, now you will have to spend less on yourself to save more for your child’s future.
You need to set financial goals
Having a child comes with a lot of costs. As a new parent, it can get overwhelming. It’s easier to break down your financial responsibilities into short, medium and long term financial goals. Discuss these goals with your spouse and think about how you will achieve them. Here are some common examples that you may need to plan for:
a) Short-term goals: cover maternity and toddler costs
The costs associated with the birth of a baby and the care of young children in Klang Valley can reach RM37,915 in the first year. While you can cut some of these costs by switching to second-hand items and relying on parents for childcare, you can still shell out a small fee – so if you’re expecting, it’s best to estimate this. you will need and start saving. .
Then there is the cost of child care during toddlers. Parents can spend around RM 1,000 per month on childcare, while live-in domestic help can cost around RM 20,000 in the first year. To avoid these high costs, some parents choose to switch from a full-time job to a stay-at-home parent. But before you make that major decision, ask yourself if it makes more financial sense for your household.
b) Medium-term objectives: cover daily expenses during the school years
As your child grows, your living costs will increase as well. Primary and secondary education in the public sector is free in Malaysia. However, if you plan to place your child in the private or international school system, you will need to spend up to RM 100,000 per year just on tuition fees.
It’s not just food or house expenses. You can fork out for school supplies, summer camps, classes, excursions, family vacations, birthday gifts… the list goes on. You may need to adjust your budget to accommodate these growing expenses.
c) Long-term objectives: to cover the costs of the university
Sending your child to college can be one of the biggest expenses you will need to cover. Public education at a university like Teknologi Malaysia University (UTM) can cost around 12,000 RM for an entire course, while private education can cost you around 40,000 RM per year. These costs will skyrocket if you want to send your child overseas. An Australian education could cost up to AUD 46,830 per year in tuition – not including the cost of living!
Covering these costs is no easy task. But it’s a lot easier if you start planning earlier and investing in growing your child’s education fund. For example, if you invest RM250 for 18 years with an average annual return of 7%, it could be around 100,000 RM. This would help cover a large portion of these expenses when the time comes.
You need one or more backup plans
Now that you have someone else who is financially dependent on you, you’ll want to make sure they are taken care of if anything goes wrong. This means having a backup plan for unforeseen costs, or even preparing a financial buffer if you can’t or are no longer around to support your family.
Here is what you can do:
- Build your emergency fund. Set aside an emergency fund that covers six months of living expenses for your household, or more if you and your spouse are independent. This helps you cover unforeseen expenses, such as a major car repair, a broken refrigerator, or a trip to the doctor that are not covered by your insurance. You will be able to pay these costs without incurring debt or tapping into savings for other expenses.
- Review your insurance policies. You may need to review and extend your insurance coverage. For example, getting enough medical coverage to cover rising medical costs is essential. Plus, a life insurance policy will give your family a financial buffer if anything happens to you. As your family grows or your financial needs change, you will need to review your policy frequently (for example, once a year) to make sure everyone has sufficient coverage.
- Prepare a will. No matter how young you are, you will need a plan to pass your assets on to your children and assign them a legal guardian. This ensures that their financial and physical needs will be met in case something happens to you and your spouse.
Hard but rewarding
Mother’s Day might be that special day to show our love and affection for mothers around the world, but it’s also about remembering the sacrifices and challenges that come with motherhood.
Being a mother can be financially stressful. But with a little preparation, you can ease this transition and focus on the joy of welcoming a new child into the world. Plus, being able to start a family and raise a child is its own reward – and you can’t put a price on it.
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