If you are expecting your first child or have a young family then your life will or has already changed forever. Its not all about you anymore and so you will have to make sacrifices with your time and money. It is certainly not all plain sailing but no matter what life throws at you, you will manage.

The joys of parenthood far out-way the negatives. However one thing is for sure, you will need to start planning ahead to make sure that parenthood does not turn into a financial nightmare.

Tip 1 – Learn to Budget

Making a budget and sticking to it is important for everyone but especially for parents. Before you had kids your money was your own and living month to month without planning ahead was, perhaps, ok. However once you have kids you really need to be responsible with your money. No matter how much or how little money you have its important to plan and a good budget will help you do this.

There are plenty of simple excel spreadsheets online that will help you get everything down in black and white. It is best to keep your budget as simple as possible. No need to make projections for the next 10 years. A simple monthly or weekly household budget will do. I get paid monthly and so like to plan for the month ahead but budgeting weekly is also OK.

First you need to record all of your monthly income. Wages, child benefit, rental income, ect. Then you need to record all of your outgoings. Recording your outgoings can be a little bit more difficult than recording your income. You need to have a look over your bank and credit card statements for the last 12 months and get everthing down on paper.

I like this simple excel spread sheet (Household Budget Template) which helps me to confirm my figures for last month and also make projected figures for the month ahead.However it really does not matter how you do it. A pen and paper will do, just make sure you do it and you will get better at it as time goes by.

Once you can see everything in black and white then you should be able to see where you are spending too much and perhaps cut back if you need to. You can also use your budget to plan ahead and save for things you enjoy. It does not have to be all about cutting back.

Tip 2 – Establish an Emergency Fund

Saving up an emergency fund can be difficult but it is important none the less. A growing family increases the chances of an emergency happening and so it is important to have something set aside. You should aim to have at least 3 to 6 months salary set aside for your emergency fund.

Make sure it is put away in an instant access savings account. There is no point socking it away in a 6 months notice account to get a higher savings rate as it will not be readily accessible when you need it. Once you have an emergency fund you are happy with then and only then should you start looking at getting a better return for any savings you have over and above your emergency fund.

As well as providing peace of mind an emergency fund can also save you money too. For example you can make big saving on your Home Insurance if you choose a higher than normal excess on your policy. The excess on an insurance policy is the amount that you pay out of your own pocket. So for example if you have an excess of €1,000 then you pay the first €1,000 of any claim and your insurance company pays the balance. The higher your excess the lower your premium. If you have an emergency fund then a higher excess is an option for you and thus a chance to save money on your insurance premiums.

Tip 3 – Get Some Life Assurance

Having an emergency fund is great, however it is not going to provide an ongoing income for your family should the worst happen. Life Assurance is essential if you have a young family that depends on your income. Recent studies suggest that your children will be dependant on your income until they are 25, possibly longer! Your income is your families most important assett and so it is really important that you protect it.

You can get expensive policies with lots of bells and whistles that will cost you an arm and a leg however a basic life assurance policy can start from as little as €15 per month. It is important to balance what you need with what you can afford.

There are many different types of cover to choose from, Term Cover, Decreasing Term Cover, Whole of life, Serious Illness Cover, Income Protection. It can all be a bit confusing so it is important to seek advice if you are not sure what cover is right for you. It is a good idea to meet with a Qualified Financial Adviser (QFA) to work out what you need and go through your options.

When all is said and done, family is more important than anything else life might throw at you and so it is vital to make sure you plan ahead as much as possible to protect your families future.

Please use the box below if you have any questions or comments.