Starting a family is obviously a huge moment in a persons life, but it also a time where seeking  financial advice is highly recommended.

When starting a family, the income and expenditure requirements changes immensely. Although initially expenses don’t grow substantially, as children grow older they account for more and more of the family budget, especially if full time child care or private school fees are involved. The biggest change for most couples is going to a single income for a period of time. At the risk of generalising, most modern couples are duel income, at least before they start having children, and their lifestyle becomes reliant on both these incomes.

Preparing for living on one income presents some challenges, the most effective way to prepare for this is to reduce financial commitments leading into having a family, this may involve reducing debts, cutting some lifestyle costs or building wealth in advance to prepare for reduced income.

This reduced income due to time off work, whether it is a matter of months or more long term, may open opportunities not normally available.  There are strategies that are income tested, that whilst working fulltime you or your partner is unlikely to qualify, however whilst earning a reduced income  become viable options.

The Government Co-Contribution is an incentive for low income earners to contribute to Superannuation, the Co-Contribution sees the government match contributions up to $1000 for those who earn less than $31,920, the maximum Co-Contribution reduces for amounts over this phasing out at $61,920. Those that have the funds to make this contribution effectively double there investment instantly, for many this period where income is reduced is the only opportunity they have to qualify for a Co-Contribution.

The Spouse rebate is another incentive by the government for low income earners to contribute to superannuation. Those who make after tax contributions to there spouse’s superannuation fund can be entitled to an 18% tax rebate. The maximum contribution for this rebate is $3000 for those earning less than $10,800 this maximum reduces for those earning more with the rebate phasing out at $13,800. Again the time off work whilst starting a family may be the only time many qualify for this rebate.

The most pressing financial planning matter surrounds insurance. Although many see insurance as a “dirty word”, there is no point in a couple’s life that they are so financial reliant on each other, and the death or disablement of one member of the couple has the potential to financial ruin a family. With a young family, if the working spouse was unable to work for as little as a few months, with no income coming in at all, most families would be in financial hardship.

There are a number of insurance options and strategies that can avoid this financial risk.

For more information on these strategies and other life events Phone: 02 47276588 or via our contact page.