You’re having a baby. Congratulations! But are you financially prepared? If not, don’t worry; this guide will lay out financial planning tips for you expecting parents.
This isn’t just about paying the bills on time. The National Health Service (NHS) states the cost of family finances, childcare, job security and improper financial planning can result in a strain on a couple’s relationship. So proper financial planning is necessary, not just for your child, but for your family’s total wellness. Here’s a handy checklist to use.
Financial Planning for Expecting Parents — Pre-Birth
1. Maternity/Paternity Leave
As soon as you know you’re pregnant, find out if you and/or your spouse have paid leave after having the baby. This information will let you know how many days you’re allowed off from work during the year, if your company offers any flexibility with this, and what kind of financial strain this can put on your family.
2. Health Insurance
Calculate expected medical costs and any other health-related insurance expenses for both you and the child. Health insurance allows your child to be looked after if anything goes wrong, but there are plenty of checkups and vaccinations needed even if your child is perfectly healthy.
If you don’t have the right coverage, now’s the time to figure out what you need and procure it.
“You usually have 30 days after a life event to make changes to certain policies, such as adding a baby to the health insurance plan,” Meghan Rabuse, who runs the site Family Finance Mom tells Parentology. “You will definitely want to make sure to do this.”
3. Write or Update Your Will
This is territory people don’t want to talk about, but it’s essential you write or update your will should anything happen to you.
Appoint a legal guardian for your child and indicate how your finances should be given to the child if you die. This will make sure your financial assets (such as your house) are secure.
4. Build a Budget
The costs ranging from diapers and food to medicine for your baby can be tremendous, so it’s a good idea to plan a family budget now. That may mean you have to cut spending on things like your morning Starbucks in order to pay for diapers later on.
A US News and World Report story showed that Americans pay an average of $2.70 for coffee; over the year this comes out to $985.50. That adds up to a lot of diapers.
5. Start Saving NOW
The US Department of Agriculture indicates the average cost of raising a child in America to the age of 17 is $233,610. Even putting aside a little money every month into a savings account you don’t touch will pay off in the end. It will also set the foundation for good skills you’ll teach your child in the future.
Continue Reading: Post-Birth Financial Needs
Financial Planning for Expecting Parents — Post-Birth
6. Get All Your Documents
You should be provided with the proper documentation — such as a birth certificate — for your child. If not, consult with the hospital staff and they’ll direct you to the proper authorizing body in the hospital.
You’ll need to get your child a social security number, too. There’s a link to the Social Security Administration at the bottom of this article for more information.
7. Life Insurance
You’re looking after a person for at least 18 years. Should anything happen to you or your spouse, you want to make sure your child is covered financially. Some companies offer life insurance benefits, which can be added on when your child is born. Speak with your human resources department and see what’s available.
8. Update Beneficiaries
This is similar to making your will. Updating or setting your beneficiaries in case of death will forgo any dispute that may occur later in the future. The spouse will usually be the primary beneficiary and the child will be secondary.
“It’s good to double-check, as you most likely did this when you got married and some of this will be covered with your will, but updating beneficiaries will prevent any further potential disputes should anything happen to you,” says Rabuse.
9. Save for Their Education
One of the biggest expenditures for families — education. According to The College Board, the average annual tuition for a public, four-year, out of state college is $22,203 (without room and board, and without books and supplies). While it may seem like a long way off, and you know scholarships are available, putting a small amount of money aside for your child’s education will help them when they step into the real world.
10. Make Sure to Spend A Little Money on Yourself
Although planning financials for a child can be expensive and difficult, it’s always a good idea to spend some money on yourself along the way. You’re no good to your child if you neglect yourself — and that includes giving yourself a treat now and then. Don’t go crazy, but be mindful of your own needs.
Having a baby is a major life event that incurs many changes. So it’s always important to remember that reviewing and changing your financial needs along the way is a good strategy for staying on top.
Financial Planning for Expecting Parents — Sources
The US Department of Agriculture
NHS
Meghan Rabuse from Family Finance Mom
Mainstay Investments
The College Board
US News
Social Security Administration