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Cape Town – Having a baby has financial implications too and most new and future parents need to start saving straight away if they want to be financially prepared to fulfil the dreams they hold for their children, says Matt Hunter, head of savings and investments at Absa Retail Banking.Many new parents, however, neglect to take care of their own futures first.

“It may sound counterintuitive to begin by taking care of yourself. But here’s the thing: Making sure that you and your spouse are taken care of is the best way to set your baby up for success,” says Hunter, who offers the following savings tips:

Take care of your own future first

You can start doing this by considering four simple steps:

Document your will

If you’ve got a spouse and a baby on the way and don’t have a will — or haven’t updated it in a while — this should be your first priority. You can do this quickly and inexpensively through a variety of online services or by consulting a specialist.

Insure your life

Life insurance doesn’t cost much compared to the peace of mind it provides. As a couple, the best option is to arrange life cover equal to ten times your gross annual income.

The power of a savings jar

The most negligible monthly saving can lead to significant changes to your family’s long-term financial wellbeing. When you get home after work, simply toss the loose coins you are carrying in your wallet or pocket in a jar – it has the power to change your future.

Plan for your retirement

By saving for your retirement from an early age, you ultimately free your little one from the financial burden of caring for you in your old age. Consider alternative, more affordable ways to invest in your retirement such as the new tax free savings accounts.

The money paid into a tax-free savings account is not taxed when cashed out, and neither is the interest that it gains.

Then take care of the baby’s future

Once you’ve taken care of your own future, you will be free to focus all your attention where it belongs – welcoming your new arrival into the world, says Hunter.

Soon you will also be ready to move forward with every parent’s dream: Providing the best for your baby’s future.

“It’s important that you and your spouse regularly talk about what that future looks like for your family. The average cost of a child’s primary and secondary education is a scary prospect for many parents and the thought of your child going to university can be daunting,” says Hunter.

Whether your child has just started its school career or has already matriculated, there are many options for parents to provide the money their children may need to finance their education.

“Investing in your child’s education is often one of the most important yet challenging saving endeavours you can undertake and as a parent you don’t need any reminding of the urgency to start planning and saving today. This however involves planning and a lot of discipline,” concludes Hunter.

Hunter gives five tips to ensure that your child’s educational costs are covered:

Invest in a unit trust

This investment is a useful and flexible option. Unit trusts allow you to make regular contributions whenever you have some cash to spare.

This savings option is robust if you still have time to accumulate finances as you can increase, decrease, stop and re-start your investment without paying any penalty fees.

Deposit spare cash into your bond account

Paying a little extra into your bond account is a good way of saving, creating a nest egg that you could tap into to cover expenses such as your children’s tuition fees.

Invest in their academic or sport achievements

If your child excels at a particular subject or sporting activity, ensure that they get all the support they need to thrive. It could potentially save you anything from a portion to the full cost of their education through educational and sports bursaries.

If your child is already in their senior phase or has matriculated, consider the following:

Take out a student loan

You may not have time to settle your mortgage or accumulate savings, but perhaps you will be able to act as surety for a student loan. This will cover a large portion of the fees, and will also ensure your child does not have to worry about finances while at school.

Acquiring a loan can be difficult as lending regulations have become stricter in South Africa, therefore it is advisable to speak to your banker about the various options that’s available.

Apply for study finance

Many institutions and Government bodies offer financial aid to students. The National Student Financial Aid Scheme of South Africa (NSFAS) is an example of such a body. Often, the aid is offered to students from disadvantaged backgrounds or those pursuing a specialised field of study such as medical research.