A growing family? How to prepare financially for family life

Starting a family is probably the best adventure in life – but it’s also a pretty expensive one. Even before the baby arrives, a lot of things have to be bought and organised, insurance policies have to be taken out, medical bills have to be paid … And after the birth it continues in the same vein: insurance, free time, food, holidays and last but not least the day-care costs can put a strain on the family budget. It is somewhat easier for parents who plan their family budget in advance.

Finally it’s here, your little miracle! One look, one smile, one wave of the tiny fingers and your little one has completely captivated you. And an exciting adventure awaits you: life as a family. What will be in store for you! Of course, in the first few days and weeks after the birth, no one wants to think about finances – at that time everything revolves around your new family member. And even before the birth, there are more exciting moments than worrying about finances, insurance and so on. But just so that you can devote yourself completely to life as a family after the birth and don’t have to worry about policies, budgets and provisions, it’s worth dealing with these issues beforehand. So that you can just enjoy your first moments together.

The budget: How much money do we actually need?

Ideally, you should have a budget before you start your family. If not, now is the time to get started. Preparing a budget is not the most exciting part of preparing for childbirth. However, especially as a family, you should keep a close eye on your income and expenses and also put money aside for the unexpected. After all, a lot of unplanned things can happen with a child! You can find our best tips on how to relieve the family budget and save money here.

Allowances and tax relief: What are our entitlements?

Good news: if you have children, you get some money back to offset the costs. As a family you are entitled to:

  • Child allowances
  • Education allowances
  • Birth or adoption allowances (depending on the canton)

You must apply to your employer for child allowances, as they are paid monthly with your salary. From the age of 16, the amounts increase and the child allowance becomes an education allowance. If you live in a canton that has voluntarily introduced a birth or adoption allowance, you will usually receive a one-off payment. 

Your new family situation will also affect your taxes. You can claim lump-sum deductions for your children and also deduct child-care costs and health costs for your children from your taxes. It’s best to contact your local tax office to find out what tax changes will apply to you in the future – and remember to claim all your entitlements.

The big questions: Who will look after our child? And how will we work in the future?

Daycare costs and loss of income are two issues that will be extremely relevant for your family budget. Who will look after your child if you both work? Do you both want to work full time? Can you afford part-time jobs? How will you finance a day-care place? What options do you actually have? In order to be able to devote your complete attention to your new family after the birth, it is worthwhile to deal with these big questions while you are still pregnant – after all, part-time jobs have to be approved, day-care places have to be applied for, au pairs have to be hired or grandparents have to be approached for “babysitting days”. Think about what your ideal situation would look like and then calculate exactly what the financial consequences would be. Then run through other scenarios until you find the option that works best for your family life and career goals, as well as financially. Our top financial tips for working part-time:

  • If you work less than 60 per cent, you run the risk of pension gaps. This is because if you have an income of less than CHF 21,330, you do not pay any PF contributions and then only receive a minimal AHV pension in old age. 
  • Private pension provision is particularly important for part-time employees. After all, the amounts for occupational and compulsory pension provision are calculated as a percentage of the total salary and become smaller the less you work. This makes payments into the 3rd Pillar all the more important. 
  • If you have pension gaps due to part-time work, you can buy into the pension fund – and deduct this amount from your taxes. 

An even bigger question: Should we get married?

Not all parents are married by the time their first child is born. Are you one of them? Then it’s worth thinking about whether marriage might be an option before the birth – even if it doesn’t sound quite so romantic. The following financial advantages and disadvantages, which we have compiled for you, are quite unromantic but nevertheless helpful:

Financial advantages of marriage

  • In the event of death, married persons receive benefits from the AHV (Old-Age and Survivors’ Insurance), the pension fund and the 3rd Pillar.
  • In the event of separation or divorce, the economically weaker person is entitled to alimony and a share of the assets accumulated during the marriage.
  • There is no inheritance and gift tax for married couples. 

Financial disadvantages of marriage

  • Married people usually pay more taxes due to progressive taxation.
  • In old age, married people receive less AHV pension than cohabiting couples or single people. 
  • In the event of a divorce, high costs may be incurred.

If you decide against marriage, it is worth drawing up a cohabitation agreement. That way you can organise your income in case you separate. No one wants to think about this, however, especially if you have a family, it is worth being prepared.

On the safe side: How to protect your family

Preparation is also the big keyword when it comes to insurance and health insurance for your family. With a child, you have a lot of responsibility in one fell swoop. It is therefore all the more important to insure your whole family as well as possible. 

Household contents insurance

Is your family getting bigger? Then your household is usually growing too. After all, even a small child needs a surprising number of things. So make sure you take out household insurance if you don’t already have any, or check the value of your household contents in your existing policy. Depending on what you buy as a family, it is worth adjusting the value in the insurance policy so that you are not underinsured. 

Private liability insurance

When your child really discovers the world, he or she can cause a lot of minor mishaps: the baby’s porridge ends up on your aunt’s Persian carpet, the house key scratches the paintwork of the neighbour’s car – and much more. That’s what liability insurance is for. Check carefully which family insurance policies offer the best conditions for your needs and adjust your liability insurance before the birth.

Life insurance

In addition to happy events – such as the birth of your first child – serious issues are also part of life. Especially as a family, you should think about how you will cover yourself in case of disability and death. Life insurance is usually worthwhile for both parents. Here, too, you should check different options and look for the best solution for you. 

Medical insurance

Even when your baby is very young, he or she needs medical insurance. For the first three months, your baby will be covered by the mother’s medical insurance, but ideally you should register your baby with the medical insurance company before birth. That way you can get to know each other after their birth and don’t have to worry about who will pay for check-ups, screenings and vaccinations. By the way, you don’t have to register your baby with the mother’s medical insurance company, but can decide for yourself which option is best for your family. 

Supplementary insurance

Supplementary insurance can also be worthwhile for your family. Here, prenatal registration is even more important. This is because supplementary insurances can refuse to cover your baby – for example, if he or she has a congenital disease. If your baby is registered before birth, the health insurance company can no longer refuse admission. So make sure you know all about your family’s options before the birth. 

You would prefer not to think about it, but it is still worthwhile to think about what happens if life doesn’t go quite the way you want it to. For example, in the case of disability due to illness (especially in the case of congenital illnesses) or accident: you can insure a disability lump sum for your child, for example through a supplementary health insurance policy or through an insurance company. This can be used to finance necessary measures that the IV (disability insurance) does not pay for.  

If your child is a little older, it is often worthwhile to take out supplementary insurance for dental costs. Not only can they be exorbitantly high, but insurers also have the right to refuse to accept your child if a malocclusion is visible. It is therefore important that you take out insurance early. 

Private health insurance can also be worthwhile for your family or your child – especially for young children, it is not yet that expensive and can be adjusted downwards at any time. 

Welcome to a world full of surprises

Your new everyday life as a family will hold a lot of surprises. The butterflies in your tummy when your little one smiles back for the first time. Hearing “Mummy” or “Daddy” for the first time. Experiencing how much personality even a little baby can have. Being a real little family. There will certainly be one or two financial surprises. But with good preparation you will be ready for them. Including thinking about how you want to finance a daycare place. We explain how we can help you here.

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