10 financial tips for new dads

18 June 2021

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Celebrating Father’s Day for the first time is exciting and a little scary! The new responsibilities that come with the joys of being a father can give even the most prepared of new dads a pause and when it comes to providing financially for your little one, it’s easy to feel overwhelmed. We’re here to help with a list of 10 things you can do to put your family on the right track towards financial security.

1. Don’t jump into any major financial decisions right away

Everyone thinks about the enormous costs of having a child but speak to a financial adviser before taking any drastic action. An adviser will help you optimise your financial wellbeing as parents and ensure you’re prepared to navigate complex long-term investment goals like university and retirement. Often new parents will also have their eyes on a spacious new home to accommodate their growing family, but it’s important to be realistic. If an upgrade means straining your budget then you’ll want to think very carefully and never compromise stability for space.

2. Purchase a life insurance policy

It goes without saying that having a child is expensive and more often than not your income is the only way to pay for the costs of looking after them. No one wants to plan for the worst but it’s important to consider what would happen to your child if you were no longer around to support them financially. Life insurance is one way to have a safety net and if you don’t already have a policy, now is definitely the time to start looking at your options. So speak to your financial adviser about taking out a policy.

3. Budgeting for a baby

Having a baby is life altering in so many ways but it can also shake-up your finances. To make the transition a little easier you should re-evaluate your household budget and determine what extra items may be needed. And it’s not just baby formula and nappies you’ll need to consider, there’s also childcare costs, healthcare costs, insurance changes and broader lifestyle changes. Be prepared to redistribute funds as well as realign long and short-term goals to accommodate the arrival of your baby.

4. Adjust your emergency savings

Growing your family needs to go hand-in-hand with growing your savings, and an emergency fund will be more important than ever once you have a child to provide for. As a minimum, you should aim to have enough cash in an easily accessible account to cover 3-6 months of necessary expenses. That way if the unexpected happens, and for whatever reason you find yourself unable to work, you’ll at least be able to pay the bills until you get back on your feet.

5. Open a savings account for your child

Opening a savings account in your newborn’s name is a great gift and savings vehicle for your child as they grow. It might seem like a long-way off, but by the time they hit their mid-20s you could have enough saved to put down a deposit on their first home or to pay for their wedding. Lending your child a helping hand is a wonderful gesture but do make sure it’s not at the expense of your own long-term saving goals. In particular, you should still be paying sufficient funds into a personal savings account and retirement pot.

6. Start thinking about childcare as soon as possible

It’s never too early to start thinking about childcare and by waiting too long you could incur unnecessary expenses down the line. Visit some nurseries before your baby is born to get a feel for the environment and remember to ask questions about waiting lists and enrolment. Don’t worry if you’re unsure of when you’ll return to work - by making enquiries early, it means you’ll have all the information you need when the time comes.

7. Create or update your will and nominate Powers of Attorney

This is a topic no one wants to consider, least of all new parents, but putting together a will is essential even if you don’t have a lot of assets. The most obvious reason is to put a financial safeguard in place for those who depend on your income and a will can also name a guardian of your choice for your child. Moreover, appointing an attorney to draft up estate planning documents will ensure only authorised parties can act on your behalf for financial and health care decisions, if you’re not able to oversee this yourself.

8. Automate what you can

When you’re busy juggling life with caring for a child, it’s easy to become overwhelmed by the exhaustion of parenting. You might find you have less brainpower to think about things like bills so make your life just that little bit easier by signing up for automatic bill payments. Automated payments are a simpler and more efficient way to manage expenses and ensure you never forget a due date. Keep in mind however that it’s not the right choice for every expense - only for those bills that don’t fluctuate such as your mortgage and car payments.

9. Teach your children about managing money early

As a new dad you’ll want the best for your children but this doesn’t necessarily mean you want them to have the best designer clothes and latest gadgets. One of the most worthwhile things you can give your child is a solid foundation that they can build upon to do well later in life. This means helping them develop good financial skills. You can start teaching a child about money from as young as 5 years old and it’s proven that children who have experience spending and saving early on tend to do better with money when they grow up.

10. Save money to spend on experiences and memories

When you have a child, you’ll want them to have experiences they will recall and savour throughout life. It’s true some of the best experiences are free but sometimes it’s worth spending money on family memories. And it doesn’t have to be a big blow-out either! You could save up for things like music lessons, a visit to the theatre or a family holiday (even just a staycation). It’s the experiences you share with your family that bring you closer together so don’t forget to save for the good times too.