Cash Club: The cost of parenthood

When I found out we were expecting our first born, I played it cool (someone had to not freak out). The first question I asked myself was, “Am I financially ready?” The emotional aspect of becoming parents was sorted, because my partner and I have a solid relationship. But besides that, the answer was no. However, it wasn’t exactly a never, as my partner and I are both permanently employed. This no was more based on having to adjust our lifestyle to accommodate this big change that was set to turn our world on its head in December 2016.

Luckily for me, my partner holds a BCom Hons in Financial Management. And I started to learn about trading Forex. I’m still learning, but have improved big time. I’ve also encountered other aspects of the market, such as investing.

So while we didn’t know how much parenthood would cost us, we knew we could prepare and plan for it. We saved money every month before he was born, and when the big day finally arrived in July 2017, we had a financial base for him. Another thing that dawned on me was planning for his future, so we started to look at investment options.

At first, I just wanted to put some money away for his tertiary education or for when he starts his independent life. He won’t have it as hard as I had, because by saving up, we could ensure there’s a bit of money for him to study, to start a business, to help him buy his first car or home, or to start his life without having to take care of me.

Since I found out that I’m becoming a dad, I also started to invest (over and above the money we’ve been saving) in a tax-free savings account registered in my name. The first three months were the hardest, but after that, I got used to living without that amount.

Another challenge was to decide in which ETFs I need to invest. Let me tell you: as a newbie investor, worrying about choosing the right ETF matters very little. Especially when you’re young and what you’re investing for is decades away from the goal, as the wrong decisions can be corrected in time.

Since my first deposit, I have made only one change based on new information regarding risk and concentration. I think as a first time investor the only thing you need to worry about is to get the ball rolling and start investing, because, in my experience, that’s the biggest hurdle.

Currently, I’m in a very risky position financially. But that’s okay because I am decades away from retirement. I say risky because I started to invest before I sorted out my emergency fund. If something should happen to hamper my ability to earn, I am in serious trouble. But I am actively trying to minimise the above-mentioned risk by trying to find extra money. How? By the two ways I know: reducing my expenses and/or raising my income streams.

And remember, always be cognisant of the cost of investing, spend less than you earn and invest or save the difference.

Njabulo Nsibande is a Just One Lap user-turned-contributor and a founding member of an investment club. His “Cash Club” blog details his experiences balancing the financial obligations of a young parent with his investment aspirations.

Follow Njabulo’s journey here every month. You can also follow his trading journey by listening to his Village Trader podcast.

Find him on Twitter: @njabulo_goje.