First-time fatherhood brings with it feelings of joy and excitement, but it can also cause anxiety. You’re no longer living for yourself alone. Instead, you become aware that all your actions impact a new person that is wholly dependent on you. This alone can make you want to rethink a few of your choices. For new fathers who grew up in low- to middle-income households, the desire to contribute to the financial freedom and a fruitful life for their families is paramount.
Financial freedom may not be something that happens overnight, but with the right tools, knowledge, perseverance and discipline, it is possible. We want to share some insights to help you set your financial goals and achieve them.
Expand your knowledge
The first step is to expand your financial knowledge: understand the meaning behind financial freedom and potentially change your outlook on money. Financial literacy equips you with the necessary skills and knowledge to manage your finances effectively, especially at a time like this when things are changing at a rapid pace.
Tackle your debt
When it comes to debt repayment, there are many ways to tackle debt. For instance, the debt avalanche and the debt snowball have worked for many people over the years. A debt avalanche is a method where you make the minimum payments on all your debts, then add additional money you can afford to pay towards the accounts with the highest interest. This will help you save on interest. The debt snowball is when you tackle your small debts first to help get them out of the way, then move onto your bigger bills. This helps you knock off small debts and gives you momentum for the bigger ones.
You can also actively tackle your debt with a DirectAxis consolidation loan. Our consolidation loan helps you pay off your debt of a few selected creditors. This will help you cut down on the monthly payments you make each month, which can help you free up money for your family.
Find a method that works for you to help tackle your debt and give you more leeway with your money.
Create a new budget
With the changes that will come with a baby joining your life, it’s vital that you think about creating or adjusting your existing budget. A budget can be a helpful tool to help you manage your money, especially because children can be costly. You need to have a budget that helps you manage your finances while also staying on the right track to financial freedom. If you haven’t yet drawn up a budget, we have a free budget template that you can use.
Bulk up your emergency fund
If you don’t have an emergency fund then now is the best time to make it a priority. Make sure it covers at least three months of your expenses, should you or your partner become unemployed or for any other emergency that may come your way. Having this financial cushion will help you take care of your family without relying on debt and is vital to your financial independence.
Get life insurance
No one wants to think about how things could go wrong but, as a new parent, you need to make sure you have a plan for the worst-case scenario. Life insurance can be helpful if you are no longer financially able to take care of your family due to a disability or your passing. It can also help your family build generational wealth as you can leave something behind that will give them a better opportunity.
Investing can be an effective way to build wealth over time as well as help you be more in control of your financial security. It also allows you to generate an additional income stream that is always beneficial for you and your family. When it comes to investing, there are various routes you can take. You can try investing in the stock market, ETFs, and real estates, which are all effective ways to get additional income. Make sure you do your research and choose something that fits your budget.
Save for retirement
To ensure financial security in later life, you will need to have various streams of income and additional savings. Saving up for retirement will ensure that you and your partner can take care of yourselves when you no longer work. While your child may want to take care of you, having a retirement plan will allow them the opportunity to work towards their own financial freedom.
Save up for education
The cost of tertiary education in South Africa is expensive. Investing in your child’s education is one of the best ways to ensure generational wealth, which is vital for when you’re no longer around. Start while they’re still young so you have enough time to bulk up that fund and ensure that by the time they start school, you have a cushion that can help you and your family live comfortably while also ensuring a good education for your children.
Financial stability isn’t something that happens in a day or even in a year. It takes time and planning, and despite that, you may still experience obstacles. It’s important to always realise that your end goal not only helps you and your family but can continue to help your family even if you’re no longer around. We hope these tips will help you plan a better future for you and your loved ones.