The news that Prince William and Kate Middleton are expecting their first child has ignited a lot of interest worldwide. The Prince is believed to have a personal net worth of $40-million, meaning the new arrival is unlikely to have any financial concerns; yet for other couples expecting their first child, it is crucial to reassess their financial affairs to ensure the child will be cared for regardless of what may happen in the future.
According to Gavin Came, Chairman of the Financial Planning Committee at the Financial Intermediaries Association of Southern Africa (FIA), couples who are expecting a baby should take the time to speak to a qualified financial adviser who can advise them on the necessary changes that should be made. “For couples who have not yet instituted any form of financial planning, it is critical that they do so once they have a child. In the event that one or both parents suffer a severe illness or a disability, they not only need to ensure that there is cover in place to secure their own lifestyle as in the past but now also they need to provide for the long term upkeep and education of their new-born dependent.”
He says whereas life cover was a ‘nice to have’ to support the surviving partner in paying off the household debts and homeloans, it is now essential since the loss of half a household’s income, in addition to coping with the bereavement of the loss of a partner, could leave a young family in a potentially financially ruinous position.
“When calculating how much life cover to implement, your financial planner would determine outstanding debt, such as home loan balances, car loans and credit cards, as well as ensuring that they have provided enough income for the surviving partner to maintain their current standard of living.”
Came says now with a new family member on the way it is essential to make provision for the child’s education healthcare and maintenance costs, from birth, through primary school and perhaps on to university. “These costs can prove substantial, especially for one parent, so life cover will now provide the necessary comfort to the surviving partner.”
He says a common mistake made by many people is a failure to update their will to take into account new circumstances. “This is especially important when children are involved.
By law, children under the age of 18 are not allowed to inherit money in their own capacity, the guardian, normally the surviving parent automatically manages the minor’s affairs until they attain the age of 18.
Came says people should speak to their adviser to review their finances on a regular basis, but especially after any major life changes such as marriage, children or an important promotion, to ensure that their financial plans always remain appropriate to their own and their family’s needs.
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