How my new surprise baby changed my financial plan - Nadine Higgins

How to navigate unexpected financial challenges with a new baby.

THREE KEY FACTS:

• Creating a budget should be a proactive plan for future investments and building a safety net.
• Unexpected events, like an unplanned pregnancy, can disrupt even the best financial plans.
• Reassessing expenses, income, and emergency savings, and seeking professional advice, can help realign financial goals.

Personal Finance 101 tells us you must have a budget – to ensure your income can keep a roof over your head, the lights on and food on the table.

But ideally it shouldn’t just be a log of where all your money goes, it should be a plan – a plan for where you want your money to go, a plan to invest funds for the future, and a plan to build your financial safety net.

The trouble is, despite the best planning in the world – life doesn’t always go to plan. In fact, the moment you think you’ve got it sussed is usually when something comes barrelling around the corner you didn’t expect.

For me, that something is coming in the form of a baby. A very, very welcome baby, but not one I planned, expected, or even dared hope for.

Yes, I can hear the squawks of “have you heard of birth control Nadine?!” from here – but if that’s you, chances are you don’t know my story. How long, hard and heartbreaking the road to having our son was, how devastatingly low our chances of conceiving him were, the many rounds of expensive IVF and how we were taking the first steps down the surrogacy route. I can only describe his existence as a miracle. A long hoped-for, sacrificed-for, saved-for miracle.

In that context, the idea that I might ever find myself accidentally pregnant is not a thought that had ever entered my head.

Yet a few days before my son’s first birthday, I felt exhausted, then sick – and then two little blue lines told me I was indeed, unexpectedly – accidentally – pregnant. I was in shock.

Herald columnist Nadine Higgins. Photo / NZME

No, you haven’t accidentally stumbled into the lifestyle section of the Herald – there is very much a financial tale coming: my fertility fortune also meant my carefully curated financial plan had hit a bit of a snag.

Given I know the heartbreak of infertility intimately, I will never not be grateful for my chance to be a mother. Just a few years ago I didn’t think I’d have that opportunity at all, let alone end up a mother of two.

But the reality is, I had not planned for this.

Freshly back at work after a year out of full-time work, and finally back home after eight nomadic months while it was rebuilt – with a fair bit more debt to show for it – I was planning on spending time rebuilding both my professional confidence, and our personal coffers.

Instead, I’ll be saying goodbye to the security of a regular pay cheque again much sooner than I had anticipated, with a more anaemic safety net than I feel comfortable with.

So how do you get the financial plan back on track when something unexpected happens – even, or perhaps especially, when the unexpected is a wondrous baby?

With my head swirling, I decided to get to grips with my current position again – to the cent. I looked at all fixed and discretionary expenses, and determined what could be trimmed, chopped, or amputated. I laid out a spreadsheet of our borrowings, and what impact different interest rates would make to those payments, and when.

Next, I focused on the income side. This is straightforward when you’re salaried, but it’s more variable – and thus more important to have a handle on – when one of you is self-employed, as is the case in my household. I made sure to look at both best and worst-case scenarios, because optimism isn’t how you reduce risk!

I’m a fan of the side hustle, so I also looked at what income I could derive outside of my salaried role, and how much of that might be realistic while juggling two kids under 2. That helped me figure out the potential shortfall we’d have if self-employed income fell short once I’m on maternity leave.

Then I looked at our emergency savings and how long it would last if called on. The answer was “not long enough” to let me sleep soundly, so I looked at my options to make that safety net safer. For example, if I could see I was going to come up against a cashflow crunch, what assets could be sold, what cash would they free up, and how long would they take to sell? What extra work could be secured, what debt could be restructured, what sacrifices could be made? Something I – and I suspect many people – find stressful is feeling like I’m all out of options. Whereas knowing I have some cards I could play if I needed to is very reassuring.

The final thing I did was seek professional advice. Yes, I am a financial adviser so I’m perfectly capable of number crunching, but stress has a way of clouding your vision and prompting rash decisions, so it helped ensure I’d considered all options and considered them prosaically, rather than emotionally.

Let’s be clear, the wolves are not at the door – but with a stop date on regular pay cheques looming, my financial projections changed, and I needed to adjust the plan. I’m fortunate in that a pregnancy affords me time to prepare – something many of life’s other unexpected events do not.

You don’t have to wait for a curveball to go through this process, but there is nothing like a bit of pressure to help you work out what you’re willing to do to have what really matters – and for me, that’s anything that affords me time with my surprise, bonus baby.