Becoming a father for the first time is a life-altering experience, filled with a range of emotions like sheer joy, excitement, uncertainty and even a bit of fear mixed in as you embrace this new role. As you welcome fatherhood, you may be thinking of the immense responsibility of raising your tiny human and also the huge financial responsibilities that come with it. While Father’s Day usually brings to the fore the emotional aspects of fatherhood, the financial responsibilities are equally important and can significantly impact a child’s well-being. Money has a big role to play as you’ll need to provide food, shelter, clothing and other essentials like health care, insurance, education and fun experiences for your children to give them a leg up in the world. Then there’s planning for the cost of higher education, among a host of other things you’ll need to do to secure your children’s future. The financial aspects of fatherhood can be overwhelming at first, especially with inflation and the high cost of living. Fortunately, there are proactive steps you can take to set your family up for success. Here are five financially focused strategies to help you navigate the early stages of fatherhood, ensuring you provide the best upbringing for your child while maintaining financial stability.

Prioritise your expenditures

If you were not as financially focused as you should have been before having a child, now’s a good time to start. First-time dads need to understand that the financial decisions made today will impact their children’s well-being tomorrow. If you weren’t big on budgeting, it’s wise to take it more seriously now. If you had a budget before, now is a good time to refine it. Additionally, prioritise your spending to ensure you’re covering essential needs over luxuries. For example, resist the urge to splurge on every toy or outfit you lay eyes on at the baby store. It’s remarkable how quickly children outgrow toys and clothes, especially in the first few years of their lives. Therefore, it might be unwise to invest heavily in these items especially if you don’t have the financial wiggle room to do so. Spend wisely.

Start an education fund immediately

It’s essential to plan for the education expenses you will incur as your newborn grows into adulthood. Education remains one of the most accessible pathways to upward mobility and is an area that new parents should keenly focus on. However, it can be a huge financial burden. If you plan to send your child to daycare and prep school, tuition can easily exceed $100K per term. You’ll also need to pay for CSEC subjects in high school. However, the largest expenses will likely come from the cost of university or college which include tuition, accommodation and supplies that can run more than $1M today. Given these high expenses, particularly for college, starting an education fund is crucial to easing the financial strain of providing your child with a solid education. Additionally, if your child decides not to attend university, the funds can support other pursuits like entrepreneurship or skills training, ensuring they have financial backing for their chosen path. Effective planning and investing can smooth your child’s education journey. Fortunately, the journey gets even smoother with solutions offered at NCB, like a mutual fund or unit trust. These are run by professional investment managers who provide diversified investments across stocks, bonds and other asset classes making them less risky. There’s also the Omni Educator savings plan which encourages parents to set a target investment goal for funding their child’s tertiary education needs.

Maintain an emergency savings fund

One thing you can count on with children is that plan as you may, unexpected expenses will arise. You might face an emergency; say, the sudden loss of income. With the potential for these scenarios, fathers should make provisions to minimise interruptions to their financial contribution. Therefore, having an emergency fund as a safety net is important. An emergency fund is a cash reserve fail-safe for unforeseen circumstances. Conventional wisdom says your emergency fund should have four to six months’ income to tide you over until you recover financially. Without emergency savings, any financial shock can set you back, and prevent you from being able to properly provide and care for your child. Additionally, putting your emergency funds into a financial product that offers a healthy return or gain on investment, like certificates of deposit, repos and money market funds might be a good option to lower the temptation of dipping into these savings.

Get adequate insurance

You may feel invincible now, but life throws curveballs. Accidents, illness and death can happen to anyone at any time and their impact can be devastating, especially if you’re the main breadwinner. Life insurance is an essential financial security measure to protect your loved ones in the event of your untimely death. Term life insurance is an affordable and practical option that ensures your child is provided for if you die before they reach an age where they can take care of themselves. The premiums paid on this kind of insurance are fixed and run the term of the policy. If you die before the term expires, the insurance company will pay the death benefit to your beneficiary. A term policy can also be converted to permanent life insurance within a certain number of years after the policy is taken out, and, though the premium will increase, it will provide lifelong coverage with the opportunity to build cash value, which is also a gift you can give your spouse and your children. Health insurance, meanwhile, can cover you, your spouse, and your child for health-related expenses. Children, in particular, are prone to illness when they are young, making health insurance crucial. If your job doesn’t provide company-sponsored health insurance, consider getting coverage directly through an insurance company. Finally, accident and disability insurance covers you by ensuring that money keeps coming in the event of a severe disability.

Start investing

Once you have solid emergency savings and adequate insurance, investing in the financial markets should be your next goal. By investing, you get to leverage the power of compounding to build wealth. Take inspiration from Robert Kiyosaki, the author of Rich Dad, Poor Dad who is known for sharing healthy financial habits. One of these habits is investing to let money work for you, even while you sleep. If you’re new to investing, consider starting with stocks, bonds and real estate. If investing in stocks scares you, how about starting with the aforementioned mutual funds, which are less risky, thus making it a safer entry point for new investors.

The role and impact of a father in a child’s life cannot be overstated, with 51.9 per cent of Jamaican children living without fathers, according to data from UNICEF. For Father’s Day, we want to acknowledge and thank the fathers who accept all their duties and show up for their children, who recognise the life-changing event that is fatherhood and the adventure that it comes with. Like with any great adventure, there are challenges along the way. Financial planning is one of those challenges that can be overcome if the necessary steps are taken. We know financial security isn’t the sole factor in being a good dad as a child also needs a role model to instil values like self-confidence, work ethic and independence. Still, with the right tools and resources, your new role as a father may be rewarding for you and your children, not just emotionally, but financially too. Speak to an NCB wealth advisor who can help you determine the best products to help secure your family’s future.