The decision to expand your family can be just as daunting as it is exciting. There are many steps to prepare for a baby’s arrival, and the pressures of financial planning is often top-of-mind. Here’s some simple actions you can consider if you’re expecting.
If you or your spouse are planning to take time away from work when your child arrives, it’s a good idea to locate all of your super beforehand. It could save you on fees and make it easier to manage your super. As at June 30 2017, according to the ATO there was almost $18 billion in lost super1. If you have ever had more than one job there’s a chance you’ve got super accounts with more than one fund, and doing a simple search could help you track down any money that belongs to you.
Before making a decision to consolidate, look out for any fees or charges that may apply for closing an account, and understand the impact of combining your accounts, including on benefits such as insurance.
When it comes to providing security for your family, a simple review of your insurance now can save you a lot of strife later. You’ll want to take extra care that your growing family is protected in the event of unforeseen events such as serious illness, disability or death. Super funds generally offer basic cover when you sign up2 but it’s important to understand the flexibility on the offer. Be sure to have a look at the insurance cover you have through your super and to consider options to increase, reduce or cancel your cover as your needs change, as well as checking any special conditions that apply whilst on parental leave.
2 Eligibility conditions and age limits apply, and claims are subject to policy terms.
Adding to your spouse’s super
If you’re a couple with a growing family, you may want to consider ways to make the superannuation journey a partnership. While you can’t combine your superannuation with your partner’s, you may wish to boost the super balance of your significant other while they are on a parental break and access the Tax Offset of up to $540 if your partner earns no or low income. Exploring these types of strategies to see if they are right for you, can make a difference when it comes time to retire.
See if you are eligible for extra super from the government
Your new child means you’ll be incurring some extra expenses for the foreseeable future, so you’ll want to make sure to check if you’re eligible for any additional benefits from the government.
If you have a yearly income of less than $52,697 (before-tax), and you meet the eligibility criteria, the government will match 50 cents for every $1 that you add to your super from your after-tax income up to a maximum. This could mean up to a $500 contribution from the government. The amount depends on your income. This co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year.
* Assessable income, plus reportable employer super contributions, plus reportable fringe benefits for the 2018/19 financial year.
A note for to-be parents
With big life events such as growing your family, it can be easy to feel overwhelmed with the number of decisions you’ll need to make. But by taking the time to evaluate your super options now, you’re looking after your growing family and freeing yourself up to enjoy all of the little moments along the way.
As with any information regarding finances, you should think about your own financial situation and needs and consider obtaining financial advice before making any financial decision.