5 tips for managing the cost of a baby
How to juggle the costs of your newborn and still save for their future.
Whether you are first time parents or expanding your family, unforeseen expenses always seem to creep up. Although saving for your child’s education and future is a priority, getting a head-start on long term savings often falls behind when trying to manage your new daily expenses.

"Starting a family is extremely exciting, however you should not lose sight of the financial impact. While accommodating the immediate expenses of this new addition to your family, you also need to save for future expenses, while your income remains the same. It is therefore essential that you spend some time planning," says Aneesa Razack, Head of Strategic Growth, Investment Products from FNB.

How to make this transition a little smoother

1. Plan ahead

Start saving early for your little one so as to ensure your finances are not negatively impacted when your child arrives.

It is important to remember that as your child grows, they become more expensive so you should start saving while they are young. You need to take into account all the different expenses that may come your way from the day they arrive until they leave home.

2. Pick the right account

Before opening an account you need to consider how much risk, if any, you are prepared to take. Cash investments are extremely low risk so your money will be safe, however the returns will grow slower than those in a riskier investment vehicle, like shares.

3. Use compounding to your advantage

If you start investing when your child is still young, you have the advantage of time to build up your money. So, instead of trying to beat the market, you can take advantage of the compounding effect. Start saving for your child early on and then reinvest the interest earned into that same account. That way you end up earning interest on interest.

4. Make scheduled transfers your best friend

Scheduled transfers are a great tool to assist you in the saving process. Monitor your expenses to work out how much you can realistically save on a weekly/monthly basis and then set up a scheduled transfer to automatically invest that money.

Remember, fixed deposit accounts will not allow you to add money during the investment term so choose an account that suits your needs, or alternatively, supplement your fixed investment with another account where you regularly add money.

5. Sharing is caring

Make sure you chat to your friends throughout your journey as they will be able to highlight unforeseen expenses and suggest some handy ideas on how to save.

"Most importantly, start early and save regularly," concludes Razack. You shouldn’t save what you have left at the end of the month, instead make a point of saving before you buy that extra pair of booties.

Media release by FNB Investment Product House

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