‘Mom-conomics’: The art of investing for a financially stable future

When a child develops a savings plan as they grow up, they may witness first hand how a modest amount can increase, which can inspire them to handle their money sensibly and prevent getting into debt as soon as they begin to earn money. Picture: Pexels

When a child develops a savings plan as they grow up, they may witness first hand how a modest amount can increase, which can inspire them to handle their money sensibly and prevent getting into debt as soon as they begin to earn money. Picture: Pexels

Published Sep 19, 2023


One of life’s most treasured events is parenthood. When you hold your newborn for the first time, a natural resolve to give your child the finest possible start in life takes hold.

And the first step in achieving the resolution is to buy expensive baby gear, name-brand toys and the like.

The truth is, the purchases are more geared towards your joy at becoming a parent than towards the happiness of the child.

The best for the child must also take into account preparing for the child’s major life events, such as education, skill development, higher education, marriage and possibly aiding in their successful adjustment to adulthood.

We are aware that discussing costs with a parent regarding their child is cruel. The financial burden of raising a child nowadays, however, is a stark reality. In this age, wants are prioritised over needs, and it can be even harder to tell the difference when it comes to children.

Life has its ups and downs, so financial preparedness is essential. Once you become a parent, it becomes even more crucial.

When a child enters the family, household expenses rise. If one parent chooses to stay at home to care for the child, the family income may also suffer.

Good financial planning helps you maintain financial self-discipline and equips you to deal with any unforeseen financial turbulence that may arise in your life.

You may be surprised to learn that 48% of women believe they are not financially ready to become mothers. One of the major conclusions from the study by Zoie Health and Franc, which focused on “Mom-conomics: The Economics of Parenthood”, was this.

The two were natural collaborators in the project since start-ups are focused on enhancing access, whether it be to health care, as in the case of Zoie Health, or investing for Franc’s clients.

The project’s goal was to assist potential parents in understanding the financial planning necessary for parenthood.

On August 31, 2023, a webinar featuring moms and financial experts, including Thato Schermer, the co-founder and CEO of Zoie Health, Ess Mukumbo, the creator of the personal finance blog and financial columnist; and Laura Du Preez, the CFP and editor at Smart About Money, shared the survey results.

In a public statement, Schermer said: “The findings of our survey were interesting and informative as well as useful,” noting that one of the problems she had as a new parent was budgeting.

They found it encouraging that 52% of the women who responded to the study believed they were financially prepared for their children and that 61% of them had even created a budget to help them handle the additional expenses that came with having a child.

The panellists agreed that such a budget should take into account costs that could go up (like medical insurance), come in fresh (like nappies and baby food), is unexpected (like buying a new car or a bigger home), and could go down (like entertainment and eating out).

If you don’t have one, Schermer advises that you start one right now. But keep in mind that this is only the first stage. To make sure you’re on track, continuously examine your budget.

Another intriguing finding from the survey is that 65% of women believed they could handle any financial catastrophe that might occur while they were mothers.

This encouraged panellist Du Preez, who also noted that joining a medical plan while pregnancy was a possibility that might boost confidence even more, especially if the mom-to-be wanted to give birth in a private hospital.

Learn about the programme’s advantages, such as the number of scans and delivery expenses that are covered, and purchase additional insurance if required.

To make up for any gaps in your medical coverage, you might also need to get gap insurance. This is crucial if you encounter any difficulties while pregnant or giving birth.

After the baby is delivered, you should think about purchasing life and disability insurance. Du Preez suggests adding your children as beneficiaries to your life insurance policy, pension fund or retirement annuity.

Drafting a will where you designate a guardian for your child in the event that if something were to happen to you. Specify how you would like your finances to be handled if you died while your child was a minor.

Another issue to consider is how to handle your finances if you are making less money while on maternity leave, which was the sobering truth for 75% of survey participants who made no money during that time.

In fact, just 20% of women earning above R55 000 a month did not receive paid maternity leave, compared to 92% of those earning less than R5 000. The women typically come from lower socio-economic groups.

Employers are not required to pay their personnel during the four months of maternity leave; the only need is that they will keep your employment secure. This may make financial planning challenging.

Du Preez says it’s crucial to talk to your company about whether your maternity leave will be paid, because it will have a significant influence on your budget.

Find out if the company is willing to continue paying benefits like medical assistance and retirement fund contributions (if these are available), if it is willing to pay even a lower wage during this time, and if there is a work-back provision that you must take into account.

It’s critical, Du Preez says, to find a means to fill the gap that arises when a family with two incomes suddenly needs to rely on one salary.

Concerningly, three out of every four respondents (or 75%) said they had not opened a savings or investment account for their child’s future or post-secondary education.

Ess Mukumbo, a panellist, says it is imperative to solve issue as quickly as possible. After all, even a tiny sum of R100 each month can increase thanks to compound interest.

There are numerous vehicles available for this. Mukumbo suggests investing in low-cost, diversified passive unit trusts and index-tracking exchange traded funds (EFTs) to cover future educational fees.

Tax-free savings accounts work well for long-term investments but are less suitable for paying for college. Education policies are beneficial since they encourage the habit of saving money each month, but they have the problem of having high costs and requiring recurring payments.

“One of the hardest parts of becoming a parent is that so much is unknown. We hope that this information helps to provide some certainty in a world that suddenly looks very different,” Schermer says.