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Planning a Family or Settling Down?

August 7 2019 5 min read Life Insurance

having a baby financial checklist

Having a baby is just about the most adult thing you do. It’s also wildly rewarding, even if it doesn’t feel like it when they’ve thrown their dinner on the floor (just after you mopped it) or they’ve somehow managed to paint their entire body in a strange concoction of food things (just after you bathed them).

Never estimate the amount of damage a small child can do in five seconds…unattended.

They’re also expensive.

And I know you know they’re expensive, but have you ever considered how much they’ll mooch off you in their first year of life?

They don’t even really do anything for that first year, except eat everything, wobble around on their bellies, cry, and cause ructions – like a teeny tiny drunk person.

To be fair they smell heavenly and are VERY cuddly.

But back to the issue of expense.

According to Mummy Pages, the first year of your precious baby’s life will set you back €4,000 across milk, bottles, the pram, and all the other good stuff you’re going to need. And if you’re having twins, you can double that.

Disposable nappies alone are set to cost you €580 a year, so now might be a good time to work on becoming a parenting influencer on Insta and partnering with a nappy brand to tap into all that sweet #spon moolah

Are you prepared financially for a baby?

Look, not everyone has the benefit of making a baby exactly when they’d planned to. It could be a case that you’ve just found out and you’re in a mad scramble to get your bits in order. Or maybe you’re not pregnant yet, but the possibilities are very definitely on the horizon.

Either way, stopping by this blog to see what you should do is a smart first step. Financial planning is always a good move, especially when you’re facing a big life change – and no life change is bigger than bringing an actual living, breathing and squawking babóg into the world.

Will it be easy? Absolutely not.

Will it be worth it? Probably. I don’t know how they’re gonna turn out so I’m not making you any promises 😋

All joking aside, there are several things you should do before your sweet cherub’s arrival.

1. Find out where you stand with parental leave

If you’re a laydeee (cue Little Britain voice), you’ll need to apply for maternity leave at least six weeks before you intend to go on maternity leave. It’s 12 weeks if you’re self-employed. Maternity Benefit (to give it its formal title) is paid for 26 weeks at €245 a week.

Some employers will continue to pay you in full, so check your contract or call into HR to see where you’re at.

Paternity Leave wasn’t actually introduced until September 2016, but it’s €245 as well and covers two weeks – which, to be honest, isn’t a whole lot of bonding time for you and the bub.

The government has recently introduced a new paid parental benefit that covers 2 extra weeks’ paid leave for each parent of a child aged under 1 year. It starts in late 2019 so depending on how pregnant you are, you may or may not qualify.

Think of it as a two-week break that you get to spend with your kid. You might want to book a holiday directly afterwards where you go somewhere else, without them.

 

You may have noted that, combined, paid parental leave stacks up to €1,960 a month. For both of you.

So that’s probably less money + a whole load of new expenses.

Those €580 disposable diapers can go in a bin and you can duct tape some cloth to your baby’s rear end and hope for the best.

Which leads us nicely onto point two.

2. Sort out your child benefit

Child benefit is a monthly payment to the parents or guardians of children under 16. You should apply within 12 months of birth.

It’s €140 a month for each child or if like me, you’re lucky enough to have twins, you get €210 per child.

That really took the sting out of having to fork out for a 7 seater  🙄

Once you’ve sorted out your parental leave and benefits and you know where you stand with child benefit, you should be better prepared to figure out the intricacies of your budget. You might need to draw the purse strings for the first couple of months while you buy all the bits and pieces – and remember you don’t necessarily need a pram that costs €600!

We foolishly forked out for an iCandy for child number one, the twins made do with a Tesco trolley and some cushions.

3. Shop around

It’s also worth taking the time to look into any long-standing contracts you have on things like tv, broadband, phones, gas, or electricity. Presuming you’re not on a new contract, there should be wiggle room to get a cheaper deal elsewhere – and you’d be surprised what you can save if you call them up and tell them you’re thinking of moving to a new provider. A whole new deal can come out of the woodwork, and every little helps.

For your best bet at price comparisons, take a look at switcher.ie.

By the way, you can forget about having any time to watch box sets so you can go ahead and cancel Netflix. Instead let me introduce Upsy Daisy.

4. Look into insurance (or take another look at the policies you already have)

Your first port of call is health insurance, especially if you are the person who is literally going to be birthing the child.

Childbirth has come a loooong way since birthing stones, but it’s tough going and can have complications. The last thing you want to worry about is money if you or the bub (god forbid) have health problems during or after the birth.

If you’ve got private health insurance, look into what your policy covers.

VHI, for example, offer a range of maternity benefits including: cover towards delivery and your hospital stay, fees like paediatric consultation, and anaesthetist’s fees, one-to-one midwife support, and even antenatal courses and baby massage.

It’s absolutely worth looking around to see which insurer offers the best deal as there could be some decent perks in it for you.

Just be aware that insurers may have a waiting period of up to 52 weeks before you can claim maternity benefits, so if you’ve found out you’re pregnant rather than you’re planning to get pregnant, it may not be an option for you.

You should also look into Life Insurance.

And, look, don’t get me wrong: I don’t want to get morbid about any of this, but if you’re starting a family, you really do need to get serious about life insurance (that mortgage protection you bought years back isn’t fit for purpose), as you never know what might happen to you or your other half.

The big question Life Insurance answers is, “how will I protect my love ones if I’m not here?”

We’ve already looked at the reality of the expense of having a baby so I’m not going to keep beating that drum.

Instead let’s look at why you might get Life Insurance.

In its simplest form, it’s a lump sum paid out to your family if you die. It’s a tax free payout to your spouse but is liable to tax if you’re not married. If you’re not married, buy two single policies and pay each other’s premiums.

Life Insurance exists to replace the income you would have brought in had you not popped your clogs.

Yes, it’s awful to think about and yes, sorry for I wrecking your new baby buzz, but it’s something you seriously need to consider.

Essentially, you’re paying for peace of mind.

The big question, then, is how much would cover set you back?

Which leads to another question: how much life insurance cover do you need/how much do you want the lump sum to be?

You might be tempted to think this is an elaborate get-rich-quick scheme from beyond the grave and settle on a few million quid, but that’s not quite how it works.

An easy way to think of it is in terms of a monthly income replacement. Maybe you’d like to leave behind €2,000 a month – or work on a yearly scale and multiply it out by how many years you’d like your family to be covered for. I go into the maths of it all in this article about how much Life Insurance cover you really need.

In the following example, €100,000 cover for a 20 year policy for someone in their late thirties would cost €10 a month with Zurich – however, based on average wages in Ireland, that’s about 2.5 years’ worth of salary, so think a little bigger if you can afford to.

To put it into context, €500,000 cover for 20 years would be €40 a month with New Ireland.

life insurance quotes

A tip: I strongly advise you get cover that lets you renew your policy when you’re older without any health checks. If you outlive your policy (yay!) getting re-insured when you’re older and a bit more hobbled will be a lot more expensive (noooo!).

Also, it’s worth it to compare all the insurers and the policies they offer to make sure you’re getting the best deal for you. If you’re taking advice from the bank, remember they are tied to one insure  so can’t give you advice on other available products.

Of course, you can do it yourself, or save yourself some hassle and ask a broker (like me!) to do it for you so you can go back to daydreaming about nursery colour schemes and how much better your kid is gonna be those other pesky kids.

Over to you…

If you’re considering applying for Life Insurance before the bub arrives, please complete this questionnaire and I’ll make a recommendation for you. Or if you prefer a chat, I’m on 05793 20836. Orrrrrrr you can schedule a time that suits here.

Chat soon.

 

 

 

 

 

Life Insurance
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