The New Parent’s Guide to Financial Planning for the Family
People aren’t kidding when they say having a baby changes everything, including – maybe even especially – your finances. In addition to the seemingly endless baby supplies you need to get, the crib you need to build, and the car seat you need to learn how to install, you also need to prepare a new financial plan to include your family’s newest addition.
We know that adding one more thing to your never-ending pre-baby arrival to-do list is not ideal, but never fear! We are going to walk you through all that you need to know about how to manage and update your financial plan to include your new baby.
First things first, let’s talk about the expenses you can expect to increase once you have a baby – we know, fun stuff!
Expenses to Expect When You’re Expecting
Take a deep breath, mommy- and daddy-to-be: let’s dive into the expenses you can expect to arise once you have a baby.
There’s no getting around it, new parents: new babies call for less spending on yourself and much more spending on diapers, formula, and baby clothes. These items quickly rack up the bill so don’t be surprised when you start swapping late nights out with your friends with late night trips to the pharmacy’s baby aisle.
Say goodbye to your motorcycle or your totally awesome two-seat convertible. If you can’t fit a baby car seat into your current vehicle, it may be time to upgrade to that good ole’ minivan life or at least something that can comfortably fit your little one’s car seat.
Another member of the family means more healthcare visits and that means more medical expenses. Unless you and your spouse already have family coverage, expect a dramatic increase to your health insurance premium, as well.
Your Guide to Family Financial Planning
Congratulations expecting parents! You just made it through the most difficult part: facing the incoming expenses head on.
Now, it’s time for the good stuff. Our expert tips and tricks on how you can best prepare your financial plan before your baby arrives.
Separate Necessity from Emotion
We get it, when shopping for your baby, you and your spouse want only the best. But the truth is, there’s no need to spend an unnecessary amount of money on something that you can get at a cheaper price and still great quality.
There are many baby items that can easily bring your bill to over $1,000. So save money where you can! Because there will definitely be items that you’re not going to be able to find at a cheap price.
Start Saving for Education…Yesterday
That hefty college tuition that new parents know and already fear is closer on the horizon than many like to admit. That’s why it’s important to start saving for your child’s education as soon as possible!
Deposit a set amount every month into a savings or money market account. Contribute to a college savings account or purchase Series EE bonds, also known as Patriot bonds. There are also various investment vehicles that you and your partner can take advantage of to minimize the financial blow of your child’s future education expenses.
Address the Tough Stuff…Estate Planning, Wills, etc.*
No one likes to think about estate planning and wills while preparing for the exciting arrival of their new baby. While it is a difficult subject, it is nevertheless crucial to the welfare of your child that you leave behind instructions in the unlikely event that you die before your child is grown.
If you don’t already have a will, now is the time for you and your partner to consider working with an attorney to draw one up. And if you do have a will, you may want to review it to nominate who your child’s guardian should be and how you would want your assets distributed. You may also want to consider working with an attorney to set up a trust to determine how you want your money left to your child to be spent.
Review Your Insurance
It’s time to look over your insurance coverage to ensure adequate protection for you and your family. Review the following policies and consider updating or purchasing them prior to welcoming your new baby:
- Life Insurance
- Health Insurance
- Disability Insurance
From understanding how many post-delivery days in the hospital your insurance covers to ensuring protection for your family in the event of a disability, there are many, many factors to consider in regards to your insurance.
Use Taxes to Your Benefit…Yes, That’s a Thing!*
Good news! When tax time rolls around, you may actually be eligible to claim certain family tax credits that can help defray the cost of raising a child.
These credits include the child and dependent care tax credit, the child tax credit, and the earned income credit. Talk with your tax advisor to discover what tax credits you may be eligible to claim to ease your financial burden.
Putting it All Together
We understand finances aren’t always the most fun or easiest of conversations to have. However, budgeting for your new baby early on can help ensure financial stability and opportunities for your family’s future. Are you ready to begin? It’s time to get planning and budgeting with Confidere Financial!
Based out of Minneapolis, Confidere offers top-notch industry knowledge and experience in financial planning for clients nationwide. Our team of independent financial advisors are committed to empowering you to take control of your life and finances.
Ensure a bright future for your family and new baby. Contact Confidere Financial today!