All financial advisers agree - don't wait for events to happen before you start planning for your future. Having a baby, losing a spouse or even taking a pay cut can be financially earth - shattering if you are not properly prepared.
The best preparation is to have some saving stashed away for the unexpected. "It should be liquid and it should be safe. Whether it's in fixed deposit, in a bank or under a mattress, the key is that it's accessible if you need it," says Anna Ho, Vice - President of Wealth Management at OCBC Bank.
How much you should have in an emergency fund depends on your family situation, but a good rule of thumb is three to six months of your outgoings depending on whether you rely on one or two salaries. There are also steps you can take to help plan for the long - term financial implications following a life - changing event.
The overall cost of raising a child is often underestimated. So, when the stork is in sight, don't just think about rising incremental spending - nappies, crib, stroller, medical expenses - for which you may have to adjust your lifestyle, but also long - term needs, especially education for the child.
"The sooner you start to save, the more options and time you have to plan and change course if need be," says Foo Mee Har, Head of Customer Banking at Standard Chartered.
With the cost of sending a child to the National University of Singapore estimated at $50,000 to $55,000 ($200,000 for an Australian University), the sooner you start saving, the easier it will be on your wallet in terms of monthly cash flow. And you will also be able to take advantage of the interest that compounds over the years.
Putting all your eggs in a child endowment plan commits you to contribute a set sum on a regular basis and will block your money for a very long time.
Anna Ho points out that most of these plans are also life insurance plans for the child. "I would advise that there be adequate life insurance on the parents, so that the premium payment continues, even if death or disability happens to either one of them.
More people are now taking pay cuts, either by going part - time or becoming self - employed. The benefits of spending more time with your children are obvious, but your lifestyle might also need to be adjusted to a lower income.
Prepare for the change as much as possible by reassessing your priorities and needs. How much are your daily expenses? Don't forget to cost in anything your company may have paid for in the past - like mobile phone bills. What are your commitments in term of loan repayment? How much can you save and where?
Family budgeting is too often left to the husband. As a precaution, you should make sure you understand the details of your family's financial situations. When appropriate (in most cases), you should co - own your home as tenants and your major bank accounts should be joint accounts.
