5 financial facts every new parent needs to know for their bundle of joy

No matter how much preparation you put into nurseries, baby reveals and doctor checkups, becoming a parent can be a whirlwind.

In the hope of making it easier, CEO at investment platform Fynbos Money Adrian Hope-Bailie shares his top pointers on what newbie parents should keep in mind on a financial level.

MEDICAL AID AND GAP COVER

Private medical costs can be expensive, making medical aid a necessity rather than a luxury. If you’re on a medical aid scheme, you’ll need to add your child as a dependent as soon as possible.

MAXIMISING A TAX-FREE SAVINGS ACCOUNT (TFSA)

One of the most powerful financial tools available is the tax-free savings account. This allows you to invest money without paying tax on interest, dividends or capital gains, making it a highly efficient way to build wealth over time.

SAVING FOR EDUCATION

Education is one of the most significant expenses parents will face, and the costs start early with daycare, preschool and school fees before considering university tuition. Setting up a dedicated education savings plan is essential to avoid financial strain when the expenses arise. For short-term needs such as school fees, a high-yield savings account or money market fund can provide easy access to funds while earning interest.

LIFE COVER AND INCOME PROTECTION

When you become a parent, financial planning is no longer only about you, it’s about ensuring your child is financially secure if something happens to you. Life insurance is a key component of this security. A life cover policy can provide for your child’s education, daily needs and even a future home deposit should you die.

In addition to life cover, consider income protection and dread disease cover. These policies ensure if you are unable to work due to disability or a serious illness, your family’s financial well-being remains protected. When choosing a policy, take inflation and rising living costs into account to ensure the payout will be sufficient years down the line.

BUILDING AN EMERGENCY FUND FOR UNEXPECTED COSTS

Having a baby brings many unexpected costs and experts recommend saving at least three to six months’ worth of living expenses in a separate and easily accessible account. The fund should cover not only household costs but also any unforeseen medical bills, car repairs or job losses that could impact your ability to provide for your child.

Financial planning as a new parent may seem overwhelming, but taking proactive steps can provide your child with a secure future and make your parenting journey a little easier.