Welcoming a baby into your life can be a wonderful and joyous experience. The new arrival can even bring a more profound sense of purpose – and, inevitably, a lot of extra bills.
"Many young couples discover that the cost of caring for a baby is much higher than they expected," says Shafeeka Anthony, marketing manager of JustMoney.co.za.
"Informing yourself about the financial implications before you fall pregnant can help you differentiate between expenses that you can't avoid and products and services that are well marketed but that you don’t need."
Madikana Kekana at MiWayLife and Saul Salzman at Dis-Chem look at the major expenses when planning a family:
On average, South African parents spend an estimated R100 000 a year to raise a child, says Madikana Kekana, head of customer experience at life insurers MiWayLife. A nursery can cost R5 000 or more for furniture, a baby-changing station, and related equipment.
"Feeding equipment will vary in cost, from bottles and sterilisers to bottle warmers and formula. Parents are looking at up to R5 500 to cover their baby's feeding needs," says Kekana.
First-time parents can expect to pay at least R10 000 for the essentials, notes Saul Salzman, managing director of Dis-Chem, which owns Baby City. These include a receiving blanket, clothing, nappies and a diaper bag, wipes, bottles, pacifiers, formula or a breast pump, a cot and bedding, a changing table, a pram and a travel seat.
As your baby grows, additional expenses are needed, such as child-proofing your home and selecting an appropriate car seat. Parents returning to work and requiring the support of a nanny, au pair, or crèche can expect bills of R33 500 to R70 000 a year.
Anthony offers the following tips when planning for a baby:
• Assess your current financial situation: Determine your total annual income and weigh this up against your expenses. Checking your bank statements is a good starting point to determine where your money goes.
• Prepare a baby budget: List all of the services and products you will need and start planning how best to source them at a reasonable price. Check where you can cut back on expenses.
• Check your employment contract: Find out which parental benefits your company offers. South African employees are entitled to four consecutive months of unpaid parental leave. You're also eligible for a maternity benefit of up to 60% of your salary if you've contributed to the Unemployment Insurance Fund (UIF).
• Maximise your medical aid: Medical treatment is expensive, so belonging to a medical scheme is an essential part of your financial planning. Check what’s covered for the birth and related medical experts. Keep costs down by giving birth in a hospital part of the scheme network and using specialists who also form part of this network.
• Explore gap cover: This helps cover shortfalls in your medical aid – for example if you require a specialist outside your medical scheme’s network or a doctor whose bills are higher than the scheme's rates. There are generally waiting periods for benefits, so apply sooner rather than later.
• Start saving: It's always advisable to build up an emergency savings fund to cover your costs for about three months. When choosing a savings account, compare how much interest you can earn, the costs associated with the account, and the entry amount.
• Life cover: This insurance is of great value as it provides financial support for your family and could cover your outstanding debts if you die. A level premium means that you'll pay the same amount every year. An age-related premium is cheaper initially, but there are compulsory annual escalations.
• Draw up a will: A will is a legal document that sets out instructions regarding inheritance, guardians for children under 18 years, and the executor of your estate. A will must be signed by yourself in the presence of two witnesses.
"Speak to a financial advisor about the above matters. An advisor is uniquely qualified to help you manage your money and secure a future for both you and your baby," says Anthony.
JustMoney offers the following general advice relating to a new baby:
1. Put together an online registry: Friends and family can contribute any amount they wish towards a gift, and you'll receive things you need.
2. Tap into support networks: Ask family members for help with babysitting and cooking. Prepare baby food and household meals in bulk and freeze them.
3. Buy multi-purpose items: Look for multi-use items like a changing table that doubles as a storage unit. Consider buying quality second-hand items such as strollers and gently used baby clothing.
4. Buy nappies in bulk: It’s cheaper to buy them in large quantities than weekly.
5. Don’t go overboard with clothing: Babies outgrow cute outfits within a few months, and baby shoes are unnecessary. Buy clothes on sale. For example, at the end of winter, buy half-price clothing for the following winter, in the appropriate larger size. Many outlets offer affordable, quality, second-hand baby and toddler clothing.
"When you invest in insurance and other financial products, do your homework first, shop around, read the fine print, and only deal with established, reputable brands, " says Anthony.
Questions may be edited for brevity and clarity.
Disclaimer: News24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, News24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.