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 Jessica, a florist, and Daniel, 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 Jessica’s income, but there was so much to buy and prepare.
Further, they were concerned over the negative long-term impact on Jessica’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 per cent less superannuation than men due to:
• losing income through maternity and child-caring responsibilities,
• fewer promotions and higher paying job opportunities, seemingly due to maternity and child-caring responsibilities.
Jessica and Daniel 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 Jessica began maternity leave.
On Daniel’s mother’s recommendation, they met a financial planner who expressed how beneficial it was that they came to see him while Jessica 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 focussed on reducing debt and unnecessary spending, then structured a savings plan to provide a cash buffer 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 Jessica’s complying fund if she meets certain criteria.
• consolidate any small super funds, so they each maintain only one fund after confirming there are no negative insurance concerns. This can help reduce fees and help manage their retirement savings.
• undertaking regular portfolio reviews, with assistance from their adviser, to ensure their investment strategy continues to meet their needs.
After months of preparation, Jessica started her planned 12-month maternity leave so she and baby Amelia could spend Amelia’s first year together.
After a couple of months, Jessica spoke to Melissa, her boss, about part-time work, Jessica could do from home.
Melissa thought it was a terrific idea and suggested Jessica 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 Melissa with staff rostering while paving the way for Jessica’s eventual return to full-time work.
Through tailored advice, Jessica and Daniel were better prepared for the changes in their lifestyle while taking steps to protect future wealth.
Through discussions with her boss, Jessica 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.
The fact is the earlier a savings strategy is implemented, the better.
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 can support you through each stage of your life.
