The Ultimate Financial Checklist For New Parents
Becoming a new parent is both a happy and overwhelming experience. Up until now, you and your spouse or partner only had to think of yourselves, but now there’s a new level of responsibility — especially on the financial side of things.
Start by evaluating your combined income situation and consider whether either of you will be switching jobs to have a more flexible schedule, making the decision to become a stay-at-home parent, or whether you’ll need to budget for childcare. Create a household budget that includes all of your expenses, and be sure to include unexpected line items such as home and car repairs and medical expenses. Of course, no plan would be complete without considering the heavy hitters that keep your family financially secure in the present, as well as the future. Here’s what should be on your checklist.
To make sure your newborn is covered by your health insurance, remember to add her to your policy within the first 30 days of birth. If your healthcare plan through your employer isn’t robust enough, research the right type of supplemental plan for your family. Life insurance is also key as it ensures that you leave your spouse (or a guardian if you both pass) with enough resources to help them raise your child. Before making a final purchase, make sure you understand the types of policies, know how the cash values and premiums vary, and then obtain a quote. For example, term life insurance from agencies like Haven Life guarantee a fixed term, locked in monthly premiums, and a tax-free payout. You should consider a 20-year plan that will last until your child is grown, but ultimately, whichever you choose will depend on your needs and budget. Keep in mind that you can always settle your life insurance policy in retirement to free up cash.
Draw Up A Will
Nobody likes to think about the end of life, but it’s important that you have a will in place. Hire a lawyer who specializes in wills and estates so you can ensure all of your bases are covered, to include going through the process of designating a guardian for your child, and deciding whether you need a separate trustee to help you manage your money and possessions.
Save For Retirement
It’s important to save for a stable financial future regardless of your financial situation. While a balanced and disciplined long-term approach with a 401(k) is considered one of the most successful routes, not all employers provide such a benefit — or maybe you’re both working from home and/or have your own business. In that case, there are other options such as contributing to an IRA, opening a Roth IRA, setting up a direct deposit, investing your tax refund, using a taxable investment account, and contributing to a savings account or CD.
Plan For College
Retirement should come before college, though that’s not typically how new parents think. Despite the chronological timeline, there are simply more financial aid options for education than retirement, though this is not to say you shouldn’t be socking money away as early as possible. The most popular savings plans include 529 college plans, a Roth IRA, prepaid college tuition plans, and a Coverdell Education Savings Account. There are other forms of aid such as work-study jobs, scholarships, grants, loans (a last resort), or living off-campus or attending a community college.
Don’t forget to set aside money for other underlooked ticket items such as moving if you outgrow your home, and vacation and entertainment, as those are investments in your relationship with your family. It’s also never too early to start teaching your kids about money, to include how to save. Start with a piggy bank before moving into a savings account and always make an effort to set a good example when it comes to finances.
About The Author
After losing her husband Greg, Sara Bailey created TheWidow.net in the hopes of sharing her journey of grief and provide insight and hope to those who experience loss. She is also the author of the upcoming book Hope and Help After Loss: A Guide For Newly Widowed Parents
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