Financial planning for new fathers

For most new dads, focusing on the big picture isn’t always easy, especially when you’re sleep-deprived and distracted by just how adorable the new little person in your life is. But milestones are on the horizon, and to best survive the journey into fatherhood, financial preparation is key.

Whether you’re still anticipating his or her arrival, or are currently adjusting to life as a new dad, here are my personal insights on financial planning for new fathers.

Finetune your budget and financial goals

Kids don’t stay little forever. As they grow, their needs will continue to expand, so it’s crucial to make budgeting a habit, and regularly update your financial plan to stay ahead of each new phase. Having a child also raises the stakes for rainy day planning, which is why it might also be worth establishing or increase an emergency fund in the event of a large or unexpected expense.

When my son was born in Jan 2023, my wife did our best to revamp the budget and get realistic on upcoming baby costs. We still don’t always get it right, but having a plan with clearly defined goals has not only kept us on track, but further mitigated potential arguments over money.

That said, creating a clear financial plan, be it with a partner or as a single parent, not only helps to create a more peaceful household but a stable one too. Don’t wing it – the more financial decisions you work out ahead of time, the more time and energy you’ll have for fun with your little bundle of joy.

If you’re unsure how to go about preparing your finances, most new dads are open to helping and are more than willing to be fully transparent on the figures. Working with a wealth manager can also prove beneficial, especially for quiet desperation dads feeling stuck under bills.

Update your will and estate plan

Becoming a new dad also means that it’s time to update your will, and indicate who you would like to serve as guardian for your child if something happens to you or your spouse. This is also the right time to ensure that various elements of your estate plan are in order, including powers of attorney for financial and health care decisions. Beneficiary designations also tops the list.

Having an effective long-term plan for your assets will allow you to safeguard a financial future for your kids (and even their kids, too). But as a reminder, there’s no one-size-fits-all approach when it comes to estate planning. It’s also not just about the paperwork but the entire process which involves far more than a few signatures and figures on a spreadsheet. Financial planning for new fathers can often be a whirlwind, so if you’re in doubt, rather enlist guidance from an expert who can offer a more holistic approach.

I’ll also add that regularly reviewing and updating your will and estate plan should become a regular habit after each new milestone. How you decide to draw up your personal estate plan depends on your overall assets, personal values, and desires, which may change over time.

Stay in the loop with education costs

Education costs represent a considerable portion of most families’ incomes and requires sensible planning and management. Even if you’d like to go the non-traditional route with your child, whatever the scenario, it’s worth forward planning as much as possible.

I know for me personally, there’s no guarantee that my child will want to study further when he’s older. That said, it’s still an option my wife and I would like him to have. Aside from making financial preparations for this, every so often I’ll also do a quick check on the fees of a few local schools and tertiary institutions to stay in the loop. According to StatsSA, the cost of education is growing at an accelerated rate of approximately 6-7% a year, which is why it’s so important to keep your finger on the pulse to better adapt your savings and investment strategies.

Financial planning for new fathers can feel incredible overwhelming, but just remember that you don’t have to have all of this done and dusted in your first year of parenthood. These types of financial goals can be broken down into bite sized chunks and form part of both long and short term strategies. This article I wrote a while back on rising education costs may also prove useful.

Don’t forget about yourself

With so many things to remember about your child, it is easy to forget about yourself. I’ll use the old plane analogy here: you need to put on your mask first before proceeding to help others.

With nappies and clothes to buy and medical bills to pay, the start of fatherhood may not be an obvious time to be saving for retirement, but it is absolutely still an important goal to prioritise. As a dad and a provider for others, keeping your long-term investment goals on track will not only prepare you for the future, but reduce the possibility that your child will need to support you later on in life.

I highly advise new dads who plan on on stopping working for a few months, to continue budgeting money toward their retirement and to hold off on drastic purchases right now. Overall, if you’re struggling to prioritise what’s urgent vs what’s what can wait, start by speaking with a professional wealth manager. It’s always great to have someone with an objective eye in your corner to advise on various considerations such as investment risk, and tax planning.

As wonderful as it is, childrearing is expensive, so it’s crucial to plan ahead as much as possible for their future and yours. As a dad myself, financial planning for new fathers is something I’m well-equipped to help with. Drop me a message here, and let’s talk.

I’m Giles Maynard. I provide individual investment and wealth management services for private clients and companies. I have been trusted by clients, large and small to manage, protect, and preserve their wealth. How can I help you with yours?