Becoming a parent is an exciting time of adjustment and upheaval; how could such a little person create so many changes – and sleepless nights?
But lack of sleep shouldn’t be caused by financial worries and reduced household income.
When Kate, a florist, and Tom an IT manager, decided to start a family, like everyone, they worried about the impact on their finances.
They tried to save as much money as they could while they still had Kate’s income, but there was so much to buy and prepare.
Further, they were concerned over the negative long-term impact to Kate’s superannuation while on maternity leave, particularly as the couple planned more children.
According to a report by Treasury.gov.au, Australian women retire with almost 30% less superannuation than men, due to:
Losing income through maternity and child-caring responsibilities,
Fewer promotion and higher paying job opportunities, seemingly due to maternity and child-caring responsibilities.
Kate and Tom decided to seek professional advice to help them maximise their savings potential while they still had two incomes, and to help them manage their expenses once Kate began maternity leave.
On Tom’s mother’s recommendation, they met a financial planner who expressed how beneficial it was that they came to see him while Kate was still working.
The adviser reviewed their situation, income and expenses, plans to expand their family, and their long-term goals. He helped them create a budget that focused on debt and unnecessary spending, then structured a savings plan to provide cash for emergencies.
Additionally, they recommended the couple consider:
Updating their health and life insurances,
Their entitlement to government support, e.g., Family Tax Benefit, Childcare subsidies etc.,
The government’s Co-contribution scheme, where the government makes a one-off contribution to Kate’s complying fund, if she meets certain criteria,
Consolidate any small super funds so they each maintain only one fund. This can reduce fees and help manage their retirement savings,
Undertaking regular portfolio reviews, with assistance from their adviser, to ensure their strategy continues to meet their needs.
After months of preparation, Kate started her planned 12 month maternity leave so she and baby Ruby could spend Ruby’s first year together.
After a couple of months, Kate spoke to Sarah, her boss, about part-time work Kate could do from home. Sarah thought it was a terrific idea and suggested Kate manage the store’s ordering system, handling sales, customer enquiries and delivery services. In today’s online environment, it wasn’t difficult to set up.
This helped Sarah with staff rostering, while paving the way for Kate’s eventual return to full-time work.
Through tailored advice, Kate and Tom were better prepared for the changes in their lifestyle, while taking steps to protect future wealth. Through discussions with her boss, Kate could care for the newest family member, while contributing to household income, and her super!
In recent years, the spotlight has been turned on gender pay and superannuation gaps, resulting in greater awareness of women’s financial issues.
Accordingly, financial advisers work closely with women, and young families. These are often people who mistakenly believe that financial advice is only for the wealthy, or that it’s not possible to build wealth when you’re younger, on a lower wage and with other priorities.
Fact is, the earlier a savings strategy is implemented the better. And that strategy will need to be reviewed and altered from time-to-time as lifestyle and priorities shift.
So, regardless of your financial position, your family plans, and your future goals, a professional savings strategy will support you through each stage of your life.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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