Starting a family is a big milestone, it brings excitement and a bit of anxiety at the same time. Unfortunately for women, starting a family does carry a price tag; women often have to take maternity leave and, in many instances, this means taking a pay cut for a couple of months until they get back to work.
Not only that, but studies also show that women will often forego a promotion, or a career move in order to take care of their family; which in turn has a negative impact on her overall finances not to mention the prevailing gender pay gap.
It is clear that although choosing to start a family can be emotionally rewarding and satisfying, it can also be challenging especially for women’s finances.
It is very important for women, regardless of their marital status — single, married, divorced or widowed — to take a much more active role in their financial lives.
So, what do women need to think about when starting a family?
- Plan for kids
While having kids is a blessing, they also come with their own expenses. Draw up a budget that includes your child’s expenses – consider the costs of a newborn baby i.e. paediatrician visits, diapers, clothes etc. And also consider where you would like to send your child(ren) to school and how much it will cost because these will impact your future cash flow.
Also, remember to update the beneficiaries on your life insurance and investments to include your kids.
Studies show that more and more millennial women are delaying having children due to their careers. That is why the new Old Mutual ‘For Women Benefit’ is worth looking into for any woman who would like to start a family but want to mitigate against the uncertainty of conceiving in their later years.
The Old Mutual ‘For Women Benefit’ falls under their severe illness and it covers three types of events:
- Complications during pregnancy
- Fertility-related events
- Other female-related events
*Ask your financial adviser about this option.
Because women often earn less than their male counterparts and frequently have to carry the bulk of childrearing duties, which also results in less income; women should think about their investments for the future even more critically.
We often hear about the dire retirement statistics – only 6% of South Africans are able to retire comfortably – and I wonder; of the 6% how many is made up of women?!
One thing that has always fascinated me is when a woman decides to put her career on hold to be a stay at home mom or take some couple of months off to raise the kid(s), they often stop contributing to their investments whereas their partner will most likely continue to contribute towards their savings or investments.
Although for a lot of women, this may seem like the logical thing to do because they will probably be earning less, it is important to also think about your future financial security.
Explore your options:
- You can opt to contribute less towards your investments instead of electing not to contribute altogether.
- Albeit it sounds controversial, you should ask your partner to top-up the difference in what you can now afford to contribute vs what you were able to contribute before you took on the responsibility of childcare – this means that both partners will have an equal share of the money earmarked for investments and retirement funds – helping the woman stay on track with her financial goals as well.
- Continue to improve your skills
Regardless of whether you choose to be a stay-at-home mom or not, you need to continue to develop your skills because you never know when they will come in handy. Enroll for a course, finish your degree/honours etc, just equip yourself with a skillset that can potentially help you if you ever wanted to re-enter the job market or venture into entrepreneurship.
- Have a support system and open the lines of communication
The African Proverb: it takes a village to raise a child rings true – you will need all the help you can get from your partner, family or friends once you start a family. That is why it is important to have your budget and goals written down.
These two things will help you navigate your new normal and make the transition a little easier. Your budget will help you stay on track with your household’s needs and wants and your financial goals will help you in the big decisions you need to make, from how much you should be saving for retirement, where you’d like to send your child(ren) to school etc.
Communicating or being on the same page and working towards these goals with your partner can certainly alleviate a lot of pressure and make the transition to starting a family a lot easier and stress-free.
**This article first appeared in City Press**