The Four Ways to Financial Freedom for Mums-to-be
If you’re a mum to be, we’ve discussed how expensive it is to have your baby, even if you have private health insurance. Getting your home prepared for the baby and the crucial next couple of years will also set you back a bit of money. So, if you’re thinking about starting a family in a year or so, starting a plan to save or get your finances in order now can give you a bit more freedom when you do become pregnant.
When to save
As most of us will have to take time off work for an extended period when we do welcome our bub into the world, we need to start saving as soon as we can. Whether it’s cutting back on spending, starting an emergency fund, or avoiding credit card debt (as we’ve discussed in our blog post), we all need to audit our finances and stick to a budget. That means looking at your income, finding out where all your money is spent each month, and learning how to live on less so you can save.
When to borrow
If you’re going to buy big ticket items or even expensive medical procedures, it’s often best to make use of an unsecured personal loan. Savvy Managing Director Bill Tsouvalas says that loans can ease the pressure of saving and leave that pool aside for unavoidable emergencies. “An unsecured personal loan is for larger purchases or medical expenses that you can account for in the medium-term. That way you pay off your loan in increments instead of saving and having the savings being eaten away by inflation. In the current climate of low interest rates, it makes more sense to take out a loan than try and run up a hill and saving for one particular item if the price is consistently out of reach.”
When to do without
One of the big expenses in setting up your nursery is buying furniture and other accessories. Since babies will be out of cots and cradles within a couple of years, you can save on furniture by buying second-hand. You need to look for furniture that is safe, sturdy, and that is in full working order. You also need to check if certain products are recalled first, just in case. The Red Nose foundation has tips and pointers for checking if second-hand furniture is safe for baby to use.
When to consolidate
If you find in your finance audit that you have many smaller debts owing on your credit cards, you may want to consider debt consolidation. “Debt consolidation is taking out a personal loan, paying all your credit card balances in one hit, and paying the entire sum off over time, with one repayment,” Bill says. “This helps you save on interest and avoid recurring interest, fees, and other costs. That means whatever you have left over each month can be spent on baby items or directed towards your savings.”
Remember to consult a financial professional or adviser before applying for loans and credit.
