Babies, bless them, are born with twinkles in their eyes, not dollar signs. It’s their prerogative to blissfully sleep, feed and roll about, oblivious to the price of fish, or Auckland real estate for that matter – and that’s what we love about them. But we all know that at some point they’re going to need to stand on their own two feet, physically and financially. OHbaby! looks into what parents can do, at the very beginning, to help their babies financially, as we’re all keen to do what we can to ensure our offspring get off to the best possible start.
It’s tempting here to suggest turning the ‘this little piggy went to market, this little piggy stayed at home’ jingle into a lesson in economics. It’s also tempting to give step by step instructions on how to fashion a baby mobile out of strings of paper notes, weighted down by coins (which chinks above the cot like a full wallet when it moves), but the reality is that when you’ve got a baby it’s all about setting up structures for the future. Below are six tips to help your little one develop not only a great little nest egg, but a great aptitude and attitude towards money as well. (This is all in your best interest of course. Right now you’re their security, but remember that in your old age, they will be yours.)
1. Sign your baby up for KiwiSaver, a scheme to help New Zealanders save for retirement which also allows investors to withdraw their contributions to help them purchase a first home. You’ll need your baby’s IRD number to do this.
2. Set your baby up a savings account You’ll need your baby’s IRD number and birth certificate to do this. Have a think about how much you can afford to put aside on a weekly basis. It doesn’t have to be much – even $10 per week would add up to $2,600 (even without any interest added) by the time they turn five. Another way to boost this account is to ask close family and friends to make a deposit in it, in lieu of baby gifts.
3. Start practicing good spending habits so you naturally set a good example as your child grows. A great general principle to adopt with money is simply save some, spend some, give some – each to his own with the proportions. It won’t be long until your little one will be running around, capable of understanding your demonstrations of the concept… and then emulating. It’s beautiful how children love to give.
4. Become financially literate If ever you needed a little motivation to get on top of your personal finances, a baby is it. Now is the time to get your head around all things financial. Do your research – be it talking to people, reading books or booking in some time with the professionals – so that you can make informed decisions and manage your own finances efficiently. It’s not just about budget, aim for confidence in terms of insurance, investments, real estate, taxes and retirement.
5. Pay off your debts and start saving Don’t even give your debts a chance to spiral out of control, put a plan in place so you have peace of mind, and a date on seeing the back of them. If you’re struggling to be able to live within your means, now is the time to address this, as unfortunately you need to be anticipating a few extra expenses!
6. Get yourself life insurance As parents we spend our lives preparing for minor mishaps, but it’s so important to take this preparedness to the next level. Life insurance is a surefire way to protect your loved ones and ensure they’re taken care of if something happens to you or you can’t work.