Last month, my wife and I experienced the greatest miracle. We welcomed our new baby girl to our family! We have been overwhelmed with so many emotions and feelings of love. Along with it has come a lot of planning, so we can enjoy our time with our newborn. I’ve put together a short list of things to prepare for financially when considering adding a little one to your family!
Start an emergency savings plan.
The first thing that needs to be considered is having money set aside for any unforeseen emergency or loss of income. Life happens, so be prepared: this is a time to protect what you have and do your best not to borrow money when those emergencies arrive. Try to have 3 to 6 months of income set aside. A financial advisor can help set up your savings plans and see how they fit into your overall goals.
Review your health insurance coverage.
Trust me, having a baby is expensive… even when you already have health insurance. Review your policy with your insurance advisor to make sure what costs are covered and what might happen in different care scenarios. Some babies come early — really early — and require special attention and care for weeks before they can even leave the hospital. Keep in mind you may have 30 days to add your newborn to whatever health insurance you already have.
Think about disability insurance, too.
One of your greatest assets is your future earning potential. You need to protect it. Although both are important to an overall plan, you may need disability insurance in the short term more than you need life insurance, depending on your unique situation. Make sure you have coverage; enough to cover your living expenses if you were out for several months. Remember: your costs have gone up with the new addition.
Plan ahead for maternity or paternity leave.
Depending on your employer, you may need to take time off work — which can significantly impact your household finances during that time. Take the time to review your company policies and state laws to get an accurate idea of how your absence will affect your income.
Start looking for child care options early on.
Personally, I was shocked at how early you need to begin looking for child care, in the event you or your spouse need it. We had to put a $200 deposit down 5 months before my daughter was even born, just to reserve a spot at our child care facility of choice! In other words, don’t assume that it will just be available, and begin planning for this beforehand to avoid any issues (or financial strain!) once your little one arrives.
Start college savings planning right away.
No time like the present to get started on one of the biggest expenses of raising a child. It seems a long way off, but the years will fly by, as they say. You have multiple options for education planning: 529 College Savings, a State Pre-Paid College Program, or you can even consider a ROTH IRA! These options can often be confusing and have lots of different stipulations, considerations, tax benefits, and so on – a financial advisor can help you sort out which way is best.
Most of all, enjoy your growing family!
All in all, enjoy your new little one and spend as much time with them as you can. You don’t get that time back. No one ever says: ”I wish I would have been away at work more.” And, if you plan properly with some of these tips, you can take it slow and relish every moment that parenting brings – knowing you have all your financial ducks in a row.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Investing involves risk including loss of principal.