Securing Your Family's Future: Prioritizing Financial Security for New Parents

But she has managed to get herself debt-free and will be paying off her car very , very soon .

So her question is , if she's got a little bit of budget , what should she consider first between her RA , buying an RA , I should say buying life cover or buying a medical aid , because she can't afford all of them and can afford one , and so I think it's a fantastic question .

It's probably very typical of a lot of new parents where the budget's incredibly tight and will be for quite some time , and so you know , kind of planning now becomes really important .

And I think you know , maybe just as a general principle , when you start out on this kind of a journey , you know you'd think that growing your investments as fast as you can would be the right strategy , but actually , for me , what you want to do is you want to protect yourself against an unforeseen emergency that could absolutely derail all of your finances .

So actually what you're starting with is risk management and risk protection first , and making sure that there isn't sort of that four o'clock on a Tuesday afternoon emergency that just gets you into debt from which you never recover . And that's the point about an emergency is you won't know it's coming until it's happened .

And so I think you know when you're in this kind of a situation and you want to do the right thing , then understand investing for the future is very important , it's a great idea , but you've got some other things to take care of first and always .

I think the analogy for me is you know , when you get on an airplane and they're kind of giving you that safety talk that most people ignore , one of the things they tell you is you know , put the oxygen mask on yourself first , so that you're in a best position to help the people around you .

And that's what you're doing now as a new parent is you need to make sure that you are financially capable of dealing with the emergencies first , and then you kind of prioritize your long-term savings later . So if that's the case , you really have two things that you can look at .

You shouldn't necessarily be looking at retirement funds first , because that's long-term savings . What you're looking at is the toss-up between your medical aid and your life assurance , and I agree that life assurance is incredibly important , but I think for me is incredibly important .

But I think for me , the thing that worries me a bit more is you know , when you've got a baby on the way , that you know you are going to spend money on hospitals or general practitioners or whatever it is .

You know you are going to spend money with doctors , if not for yourself then for your baby , and making sure that you know , if something serious happens from a medical point of view , that you've got at least some kind of a medical insurance , some kind of a hospital plan to take care of the most dramatic costs , the most urgent costs .

I feel that's incredibly important .

So if I'm in this position where I've got no form of insurance no life insurance , no disability insurance , no RA , no tax resavings , no medical aid but I have got no form of insurance no life insurance , no disability insurance , no RA , no tax resavings , no medical aid but I have got a bit of budget the first thing I'm doing is I'm getting medical aid and

if you're young and healthy and your baby I'm not sure when your baby will be born . If your baby's already born , you'll know if the baby's fairly healthy or not . But gee , I think the first thing is make sure you can get at least kind of a hospital plan and make sure you can get the best hospital plan you can .

Make sure that you've got a bit of choice , that it covers the ability for you to go to a range of doctors , a range of hospitals if necessary , and you're not stuck , if you're living in Joburg , that it tells you you need to go to poor fighter to go to the hospital , because that's obviously not helpful .

So make sure that you've got some say in where you get your care from . And I would say that when you're choosing a medical aid , try and shop around . You know , don't necessarily just go for the first one that you come across and don't go for the one that advertises the most or that your friends tell you about .

Go for something that you've done some homework on , that you've got some quotes from .

So I think you know my first piece of advice there is get at least three quotes for a medical aid and make sure that you know you kind of tell the people that are giving you the quotes that you're going to compare them to some other providers and , you know , feel free to share those quotes with each of them so that they can give you the best kind of

criticism of what the other people are providing . So if you're going to company A , then show company A the quotes from company B and company C and once you've done that , across all the products that you've been offered , you'll figure out which is the best one for you .

And you know , once you've kind of got a medical aid done or a hospital plan done , you know then you can start to look at life assurance . I mean , I'm in no way telling you that life assurance isn't important . Of course it is .

You know , when you've got a young family and you want to provide for your child , if you die , then you have to get life assurance . You know that's important . But it can be the second most important thing that you do .

And I think when you do life assurance again , follow the same process get a few quotes , make sure that you ask them to quote you for disability insurance as well .

The thing that we often forget is we cover our life assurance if we die in an accident , but what happens if we have an accident and we're still alive and still physically around but not able to work . And then you want insurance to kind of protect your ability to earn an income .

So to me your order of priority would be get the hospital plan at least or , if you can , a bit of a better medical aid .

Then make sure that you can get some life and disability insurance that protects your child in the event that you die , but equally that if you're alive and unable to earn an income that your disability insurance covers you as well , then you can look at getting the long-term retirement savings in place and maybe you blend that retirement savings by choosing a

retirement annuity and a tax-free savings account . I think one of the tips for parents is , when you've got a new baby and you've got friends or grandparents or aunts or uncles who want to give you a present for your baby , ask them to contribute to the tax-free savings account for your child .

That's an incredible gift and if you can't top up the contributions every year because we're allowed to do 36,000 Rand a year per person , then maybe between the friends and family they can do that and help you kind of grow that tax reaccount for your child as well , and at least that sets your child on a good path for later in life , when they can then afford

to pay for schooling or university or you know , a deposit on a house or you know whatever it is . But that's something that they can do later in life and , you know , even if you're putting in 500 bucks a month or 500 bucks a year and other people putting in some money as well , it's a great start .

It's the ability to let that money start growing for them which is really important . So thank you so much for the question , amy . I think it was a great one . I think a lot of parents are in a very similar position and I hope it helps you and all the best with your baby .