After ten or 12 years, your marriage is as comfortable as Saturday’s flannel shirt. Now the real work begins. Developing a sound plan to secure the financial future of your marriage has probably been lost in the crush of kids and career.
Many couples live paycheck to paycheck and don’t take a long view of their finances. This is the beginning of future money problems that will strain the marriage and could be catastrophic if one spouse dies or is incapacitated.
There’s a message in your burgeoning gut and the quickly evaporating balance in your current account: You’re not a kid anymore and you’ve got to think about things like the mortgage, insurance, saving for school, retirement and even the unthinkable such as naming a legal guardian for your children should both you and your spouse die.
The type and amount of insurance you need is a good starting point for making a detailed financial plan. If the family depends on two incomes to cover daily expenses, think about insurance to cover medical costs and to replace at least a portion of the lost income if you or your spouse can no longer work.
According to recent figures from a research source in Ghana, a baby born now will cost a middle-class family over GHS 50,460 to raise through age 17. The figure climbs to GHS 70,180 — about GHS 25,000 a year — if a family’s annual income is above GHS 65,800. And that doesn’t even include school expenses, now averaging GHS 26,070 a year at private schools and GHS 11,976 at public ones. Covering the costs will inevitably be a stretch, since a recent Consumer Finance Survey indicates that nearly two-thirds of households with young children are saving no money at all.
Research shows that, given the same income, people who commit to a financial plan save twice as much money as those who just wing it.
The warm, fuzzy upside: The more financial decisions you work out ahead of time, the more fun you’ll have with your new baby.
First Month
Cut down credit card debt. The first trimester is the time for cleaning up your financial act. A good place to start is with credit cards. Balances in the thousands of dollars cost hundreds in annual interest — money you’ll need for new expenses. They also hamper your growing family’s ability to get loans for big-ticket buys like a home or the inevitable minivan.
Consider transferring your balance to a credit card with a lower interest rate. Next, you’ll need to create a new budget. To start, keep track of every penny you spend. The easiest way is to reserve a compartment in your wallet for receipts for all cash purchases. When the time comes to crunch the numbers (the third month), those receipts — along with credit card records and a scrupulously kept checkbook log — will document your spending patterns.
Second Month
Install finance software. These personal-finance workhorses, provide forms for creating a budget and chart-making tools for tracking your cash flow. It’s too early to enter numbers, but you can get acquainted with the program’s functions.
Of particular benefit to busy parents is the software’s capacity to organize financial records in one place. You’ll come to appreciate this convenience at tax time, loan-application time, and any other time you need to put your fingers on details like account numbers and balances.
Update your beneficiaries. Double-check for and delete any out-of-date beneficiaries on your company-sponsored life insurance, particularly if you were single when you started your job. Whenever there’s a major lifestyle change, you need to look at those beneficiary statements. Your parents, siblings, or even an old boyfriend may still be listed.
Third Month
Check up on your credit report with any of the three Bank of Ghana licensed credit bureaus. Even if you pay your bills on time every month, errors can slip into your credit report. Save time and aggravation by correcting mistakes now, when your life is relatively sane. A clean record is particularly important for expectant parents since they may soon be in the market for a bigger home or car.
You can order your credit report from Dun & Bradstreet Credit Bureau limited at Airport, HudsonPrice, or XDS Data. Be forewarned that applying for a free credit check from less reputable providers can be an invitation to identity theft. In addition, limit yourself to only one a year. Any more than that can hurt your rating.
Crunch the numbers. Now it’s time to get down to the last step of budget-making. Your checkbook log, credit card statements, and the receipts in your wallet will give you the numbers you need to get started. Type them into your software program’s budget worksheets, along with your household earnings. Print out the results — this is the “before” shot for your budget makeover.
The “after” picture will need to be a lot leaner. Your goal is not to just break-even but to save money regularly.
When creating your new budget, keep in mind your upcoming childrearing costs. According to a research calculations, households with an annual income above GHS 65,800 can expect to spend about GHS 1,120 a month to provide an infant with basics like food, clothing, shelter, transportation, and childcare. If you take an extended leave from work — or switch to part-time hours — you’ll face the financial double-whammy of covering these new expenses on an income that is suddenly smaller.
Couples who can’t seem to save their way to the 10% mark may want to book an appointment with a certified financial planner, a pro trained to help clients set monetary goals. You can always consult me (Gabriel) for further discussions on that.
Fourth Month
Make a friend in HR. Get a full briefing about maternity or paternity benefits from human resources. Companies mostly in Ghana requires of you to give at least 30 days’ notice when requesting time off under the Family and Medical Leave Act, which entitles any new parent who works for a company with at least 50 employees to take up to 12 weeks of unpaid, seniority-protected leave. Your employer must pay the usual portion of your healthcare benefits for the duration. In addition to any paid leave you might have.
Practice austerity. Last month you set a new budget; now you may be tempted to put it on hold and enjoy the good life until the baby comes. That would be a mistake.
In the second trimester, you need to make sure you’re putting something away. Start by earmarking funds to offset the loss of income you expect from any unpaid maternity leave. Figure out what the gap will be and then try to make up for it beforehand. If you also plan to furnish a nursery from scratch — or purchase pricey baby gear — set aside additional savings toward that goal. Put the amount you’ll soon spend on the baby into short-term fixed deposits accounts or money-market accounts. You should have a tidy sum by your due date — if you begin today.
Fifth Month
Soul-search and cost-justify. When the baby arrives, will you return to work or stay home? You don’t need to lock in a decision right this minute, but you should schedule a heart-to-heart with your spouse soon. When making your decision, keep in mind the following expenses. Full-time, out- of-home childcare averages GHS 4,000 to GHS 6,000 a year, GHS 12,000 to GHS 15,000 in major cities like Accra and Kumasi. Nanny care can be even higher. Commuting and incidentals like coffee also take a chunk out of a paycheck.
On the other hand, you may feel strongly about maintaining long-term perks like your company financial plan. By staying on the job, you don’t compromise pensions, benefits, or your career track. Finally, there are the psychological factors: Do you both enjoy your work and feel it’s important to continue? Or is it better for your family to have one parent at home?
Do the daycare shuffle. If you plan to return to work, your second trimester is a great time to evaluate childcare options — before your energy wanes and mobility becomes complicated.
To get the most bang for your buck, check nannies’ references or confirm that daycare administrators have degrees in early childhood education, staffers receive child development training, and caregivers don’t come and go with the seasons.
Sixth Month
Buy life insurance. Most expectant parents should insure themselves for at least six to eight times the amount of their gross annual salary to cover the anticipated dependent. A life insurance actuary for policies like whole life, variable life, and universal life are quite complicated and often a bad deal — especially when you can earn interest through other means, such as tax-deferred and tax-free investments like retirement accounts and college savings plans. Parents should stick to term life, preferably 20 years or less. A 30-year-old woman in good health can buy GHS 75,000 worth of coverage for about GHS 300 a year.
Write a will. Though you may be loath to decide who would raise your child and manage her finances should both parents die, it’s easier to write a will and choose a guardian before the baby is born. A couple is less emotional before the children are born. (Expect to pay between GHS 500 and GHS 1,000 for a will not complicated by tax-planning issues.)
Seventh Month
Factor in friends’ benevolence. Right now, some of your mom’s friends are almost certainly crocheting yellow blankets in honor of your baby’s arrival. Your pals are also busy organizing showers behind your back. People tend to be unbelievably generous when a child is born, so you may want to see what you receive before you buy any but the most basic baby goods.
You should also take a moment to open a safe-deposit box at your bank. Some people will undoubtedly send savings bonds to celebrate your baby’s birth. You’ll want to keep them — and the birth certificate — in a safe place.
Before you stash the goods in the vault, make a note of your bonds’ vital statistics (series, denomination, issue date, and serial number). You can then track the earnings online using the Savings Bond Wizard.
Keep your eye on retirement too. With nursery walls to paint and breathing exercises to practice, your third trimester is not the obvious time to be saving for retirement. But the sad fact is that a majority of baby boomer women have less than GHS 10,000 in retirement savings — in part because many stop adding to their investment plans when they scale back their careers to raise children. I advise women (or men) who plan to stop working, even for only a few months, to vow to continue budgeting money toward their retirement.
Moms (or dads) who stay out a year or more can pay into a special retirement plan.
Eighth Month & Beyond
Cover your baby. Most health insurance companies allow new parents 30 days after delivery to add their newborn to their policy. Check with your carrier or human resources. In any case, it makes sense to get the enrollment form and start filling it out now, leaving blanks for the baby’s name and birth date. Assign your spouse the task of adding those details and getting the paperwork to HR as soon as you and your baby come home from the hospital.
Invest in couple time. By some cosmic coincidence, the price of a movie ticket is roughly equal to the going rate for an hour of babysitting. That means a trip for two to a two-hour movie will cost double the money — a full 100% markup — after your child is born. If you’re smart, you’ll lock in quality time at prenatal rates, a tactic that also makes sense emotionally. Once a baby joins the household, your bonds as a couple will stretch in new and different directions; it helps to reinforce them now.
Conclusion
Your financial plan should involve the dreams, goals, resources, and responsibilities of the entire family. If you have a spouse, partner, or children, you may need to provide guidance as your family develops a financial plan. The success of any financial plan is dependent on the support, persistence, and dedication of all people involved. Without the participation of the entire household, you’ll face a continual uphill battle when it comes to your finances.
Your spouse, partner, or children can be a help or a hindrance. As a family, you will face many challenges along your financial journey. But if family members are truly on board, they will work to help find solutions and not create additional challenges for you.
How do you get your family on board with your financial goals? You must inspire them, just like a coach might. A coach needs the cooperation and coordination of each player on his team. In order to get teams to pull together, great coaches lead by example and command the utmost respect from each and every team member. Their team members strive to perform at their very best each and every game, not only for themselves, but also for their coach and their team. Great coaches inspire greatness.
So how can you inspire your family when it comes to your personal finances? Share your vision, in living color, with your family members — your team. When you present your vision, make sure that you include the vivid details of why a goal is important to you and your family, and what accomplishing this goal will enable you all to enjoy. Elaborate on the payoff for putting in the hard work, compromise, or sacrifices that may be required to achieve these goals.
Now you must figure out how to inspire your own family. On a sheet of paper, write down what you’d like to say to your family as you seek to bring them on board with your financial future. What subjects are near and dear to your spouse’s or children’s hearts? Start there — they’ll be highly motivated to help you help them get what they want.
Aside from that, if you’ve followed my planner, the final month of your pregnancy is time for putting your feet up, both fiscally and literally. Relax, pour a cup of tea, and pat yourself on the back for preparing your family’s finances for your new arrival.
Author: Gabriel Ofori Yeboah
Fund Manager, Investor, Broker, FX Trader, Consultant–(Investment, Financial Analyst, Banking) and CEO & FOUNDER–GOY FINANCIAL SOLUTIONS
Email: gabbynanaoforiyeboah@gmail.com Tel: 0246751535
