#MothersDay: Guide to effectively plan and secure your children's future

Today is Mother’s Day. I wish a very happy day to all kind of mothers: those who have experience, those who are already grandmothers, those that just became a mother and even to all those future mums. Thank you for all their pearls of wisdom, for your love, your help, you advice and thousands of other things  that you did, do and will do for your kids, starting with the essential one: bringing them to life.

I think one of my mom's greatest satisfactions of motherhood is seeing me become a financially responsible adult who can stand on her own two feet.

If you are a parent, you’d know how having your first child is the joy of all joys. But life is unpredictable; no one can foretell any unfortunate events that may befall you, and God forbid, separate you from your children. To make sure that your babies basic expenses are met in your absence, you have to plan.

Financial planning is about developing strategies to help you manage your financial affairs and meet your life goals. Financial Planning for your children should begin with investments for early years of schooling and should finally target higher education.

So whether you’ve just found out you’re expecting a bundle of joy, or whether you are already starting to show, it’s never too late to financially plan for your bundle of joy. It’s always prudent to enter into a situation well prepared and in a planned manner which is going to affect your financial life. In fact planning for child’s future and managing of the finances should start much before a child is born. Whether it's for college or a safety net, here are some simple ways to save money for your children from Viwe Diyasi, certified financial planner and general manager at Absa.

When you are expecting, you need to take all the milestones into account. These include:

· Pre-birth: you need to take into account hospital bills, medical bill, nappies, finding a nanny or crèche, an education fund.
· Post birth: Medical aid, school deposits, annual fees, extra murals, uniforms, text and school books, clothing (as they grow quickly in the first few years!).
· Post school: By now, you should have an education fund for tertiary education, and a deposit for a car, or have planned for the cost of public transport.
· Post tertiary: Don’t bank on your little bundle of joy moving out of home at 18, or even 25. Help them plan so they can be financially secure enough to flee the nest sooner, rather than later.

These are just a few examples of milestones, and you should speak to a financial advisor to make sure you have all eventualities covered, expected and unexpected. Invest for each milestone, once you have trimmed debt, and ring-fence that amount for each milestone.

Once you’ve worked out what you need to plan for, the next question is how to get there.

Here are some steps you need to take:

⁃ Minimise your debt and so you can start saving!
⁃ Make better choices with regards to your social life, it’s the simple aspects such as cooking rather than getting takeaways, eat in, have your friends around so you don’t need a baby sitter, and save on the cost of an evening out.
⁃ Prioritise the milestones, don’t compromise the important must haves.
⁃ Be open with your kids about money so you impart the knowledge.
⁃ Review your plan monthly.

There are also a few specific life circumstances you may need to take into account, such as if you are divorced. Divorced women suffer the most financially after a divorce because, on average, your ex will earn more than you, and you may have more costs because children mostly live with mom.

To avoid heart-stopping moments after a divorce, or end of a partnership, couples must be open with each other about money during the union.

And, as a single parent, whether through divorce or because of other reasons, it becomes key to clean up your finances, reduce debt and manage expenditure.

As a single parent, you may need more life insurance, which will solve the ‘who will look after my child if something were to happen and I am unable to provide for my kids’. That’s where life insurance is necessary, and insurance can also cover you if you fall ill.

Stay at home moms

This could prove to be a more challenging option than going back to work, although there are many rewards. If you decide to go this route, first work out if it’s affordable. You also need to have a concrete financial plan to work out whether this is possible – including identifying any pitfalls, and potential future events, and plan for those too.

Other tips include:

⁃ Consider a part time job you can do from home
⁃ Make sure there’s shared ownership of assets to protect yourself from unknown future
⁃ A plan on how to replace your invaluable contribution to the family in case something happens to you.

Overall, always remember to save for your retirement. With so many tax benefits, it’s impossible to ignore these advantages, and make sure that you are putting away enough so that you don’t crimp your lifestyle when you stop working.

Have an updated will, at all times.

Don’t forget to reward yourself, and don’t be scared to ask for what’s due to you, be it maintenance, or a raise at work. Take charge of your finances, and your finances will take care of you.

Have you planned for your children’s future? Would you like to add few more practical points in above post?