Once you take the leap to start a family, your finances will change rapidly. The finances of an adult with kids look a lot different than that of a childless person. You have to provide not just for yourself but also for your family’s needs.
But if you have a sound financial plan for your family, you can take solid steps toward financial stability. You can set yourself on the right financial path, put money aside for life’s big moments, and protect your finances from unforeseen expenses.
First, you’ll need well-thought-out and planned measures that include goal setting, budgeting, debt management, education planning, insurance coverage, retirement, and estate planning. But it can be complicated because you have a lot of things to consider. And you’ll need to make adjustments over time as your circumstances and your family’s needs change.
In this article, read some advice on how to prepare for starting a family.
What is Family Financial Planning?
A family financial plan assesses, manages, and optimizes your family’s financial resources for short-term and long-term goals while ensuring financial security and stability. The main goal of a family financial plan is to create a comprehensive road map to address various needs and goals and achieve financial growth and stability.
Moreover, it helps keep your finances on track. Preparing to start a family means making smart saving and spending decisions as early as possible, so you can be financially in control.
How to Prepare for Starting a Family
Here are family financial planning tips and steps to keep in mind:
Step 1: Set Your Family Financial Goals
Before starting a family, you should know what financial goals you want to achieve. These can include purchasing a house and a car, sending your children to a private school, getting an educational plan, managing your own business, and retiring early.
The financial plan for each family may differ. Customize yours with short-term and long-term goals that match your family’s needs. Moreover, they should be clear, realistic, time-bound, and specific.
For example, some families may focus on short-term goals like paying off debt or creating an emergency fund. Others may look at long-term goals like saving for a car or a house or building a fund for early retirement in their 50s.
Make sure to set deadlines for achieving these goals and plot the steps you’ll take to achieve them.
Step 2: Create a Budget for Your Family
Setting a budget and sticking to it will drive your family's financial plan.
Whatever budget you may have had before having children won’t work once you start a new family. Costs of little things like diapers, baby food, clothing, and extra laundry detergent quickly add up. Babies also grow up fast, so you must allot more for their growing and changing needs—including healthcare and education down the line.
With a family budget, you’ll know how much money is coming in and how much is going out. It will help you balance your spending priorities, save for the future, and ultimately, make better financial decisions.
Step 3: Settle Your Debts
If you have outstanding debts, now is the best time to pay them off. Your expenses will grow once you start a family, and you’ll find it more challenging to settle debts alongside your growing financial responsibilities.
Prioritize which debts to pay off first and determine how to settle them sooner. For example, you can start with any high-interest loans or credit card debt, as they cost you more in interest.
Once you settle your debts, you can focus more on allocating funds to achieve your financial goals, such as investments, insurance, educational plans, your first home, or your first car.
Step 4: Review Your Life Insurance Coverage
When you’re insured, your family will have a financial safety net when the worst happens. Review your existing life insurance plan and see if it needs updating. Different life insurance packages may suit your budget and your family’s needs and provide added financial protection to achieve your goals.
If you’re employed, you might have group life coverage as one of your employee benefits. You can also opt to buy more affordable term life insurance that you can renew every year or purchase a variable unit-linked insurance (VUL) product with an investment component.
Singlife, the first purely digital life insurer in the Philippines, offers a variable unit-linked insurance (VUL) plan called Protect Your Goals. It helps grow and protect your savings for as low as ₱500 per month and covers your family with 125% of the premiums you’ve paid.
The best part? You can avail of this VUL product conveniently through the Singlife Plan & Protect App—no financial advisor needed.
It’s also easy to stay invested. Just keep at least ₱500 in your Emergency Fund monthly, and the app automatically invests the money for you! You can also increase your contributions anytime you want and manage your plan 24/7 through the app.
Step 5: Check Your Health Coverage
Building a family comes with significant expenses during pregnancy, childbirth, and your child’s growing-up years. An HMO and health insurance coverage can help cover costs like hospital confinement, check-ups, and baby wellness care, including immunizations for the first year. Check out-of-pocket costs regarding maternity care, delivery, and more, so you can financially prepare for them.
You can also explore additional health coverage to protect yourself and your family from high medical costs. Singlife’s Protect from Medical Costs product covers medical bills due to critical conditions, including pregnancy-related medical expenses.
What's great about this product is its family plan option, so everybody in your immediate family can enjoy coverage. Get this product from the Singlife Plan & Protect App.
Step 6: Boost Your Emergency Savings
It’s easy to overlook the importance of an emergency fund when you’re trying to stay within your budget. However, a dedicated and sufficient emergency fund is essential when it comes to financial planning for families.
An emergency fund can support your family in case of sudden unforeseen events, like job loss, urgent home repairs, or financial assistance for extended family members.
The bigger your emergency fund, the more it will give you peace of mind because you know you have money set aside for any surprises down the road. With an emergency fund, you can also pay for short-term financial challenges without getting interest-incurring loans and derailing your long-term plans.
Save at least six months’ worth of living expenses and put it in a high-yield account. Your emergency fund should be part of your family’s financial plan until you hit your target amount.
Not sure where to put your emergency fund? Consider the Singlife Plan & Protect App’s Emergency Fund, through which you can get up to 5% in earnings every year. Plus, enjoy instant life insurance coverage worth 3x your monthly income.
Related reading: 5 Financial Management Apps to Help You Stay on Top of Your Finances
Step 7: Get an Educational Plan
You may think it’s too early to get an educational plan for your baby. But the sooner you start saving for their education, the sooner you can finish paying it off and secure your child’s future.
With a dedicated tuition savings account, the money you put into it will add up over time. But the risk is tapping into this account when you have financial emergencies.
An alternative is an educational plan, which can protect you from financial uncertainties and ensure your child will receive quality education in a good school. Because it’s a long-term investment, it has more time to grow and offers more significant potential returns.
However, educational plans in general can be expensive. If you’re looking for a budget-friendly option, you can use Singlife's Protect Your Goals to secure your child's college education. Start early to turn this into a long-term investment for your child’s future.
Step 8: Plan Your Retirement
Don't forget to prepare financially for your retirement. Although it seems far off, saving early will ensure you have enough retirement funds and won’t be a financial burden to your children in your senior years.
Aside from contributing to your SSS, GSIS, or Pag-IBIG retirement pension, consider getting another retirement savings where you can put at least 10% of your monthly income. If your budget is tight, you can start with a lower amount until you can afford to invest more.
The earlier you start saving, the more opportunity for your money to grow. So if you start with a small amount but consistently invest in your retirement fund, you’ll benefit from the compounding returns, which will grow your money over a longer period.
For instance, with Singlife’s Protect Your Goals, you can get an estimated fund growth of ₱385,123 by the 10th year if you invest ₱25,000 yearly (at a 10% estimated growth rate). This product’s funds are managed by the Philippines’ top investment managers—ATRAM Trust and Metrobank.
Ready to begin your investing journey? You can start with as little as ₱500 per month and top up when you can afford to save more. There are zero entry fees—100% of your money gets invested, so your money grows faster compared to other VUL products in the Philippines.
Financial planning is a must at every life stage, but more so when you have people who depend on you. Knowing how to prepare for starting a family is essential to achieving a secure, comfortable life for your family.
Yes, it will be challenging. But nothing that hard work, budgeting, saving, and investing can’t fix!
Source:  Family Financial Planning (Investopedia, 2023)