The Finest Finances for Parents
Written By: Derek Cannon
Having a baby enriches your life in many ways. But with every new bundle of joy comes plenty of additional expenses, financial concerns, and future considerations. Now is the time to make important financial moves that will set your family up for a secure and stable future. While it can be tempting to postpone these tedious tasks while you’re battling sleepless nights and adjusting to parenting life, the sooner you tackle these matters the better! Here are some key areas to focus your financial efforts.
Set Financial Goals
Establishing financial goals is one of the most important steps you can take as a new parent. These goals will help you keep your finances on track so you can enjoy long-term stability and give your children the life you want for them. Try to set a mix of short-term, mid-term, and long-term goals to guide your savings and purchasing decisions for the foreseeable future.
For example, buying a home is a common financial goal for young parents. If you want to buy a home at some point in the near future, start looking into your options so you know how much money you’ll need to save for a down payment. You can even start getting your pre-requisites in order now. As you navigate the home buying process, Redfin recommends calculating how much home you can afford, getting pre-approved for a mortgage, and finding a great real estate agent to guide your search.
Tackle Estate Planning Now
Estate planning is a dismal task that few people think about when they’re young, but it’s important to make sure your kids will be cared for if something should happen to you. Purchase life insurance, make a will and declare a legal guardian for your children. You can even plan your own funeral. According to LHLIC, funerals can easily cost $9,000 or more. Tackling your own funeral and burial arrangements—and paying for them now—will save your family from significant financial stress if you pass away unexpectedly.
Reevaluate Your Health Insurance Plan
Thankfully, your baby is covered under your health insurance plan for 30 days after birth. But the clock is ticking! Before those 30 days are up, you will need to figure out insurance for your little one. According to The Healthcare Hustlers, you can officially add your baby to your current health insurance plan without waiting for your open enrollment period. All you have to do is gather your baby’s Social Security card and birth certificate and call your broker. On the other hand, this might be a good time to change insurance plans, especially if you anticipate using the healthcare system more often now that you have a newborn.
Establish an Emergency Fund
Another important way to plan for the future is to secure your family with a solid emergency savings fund. The purpose of an emergency fund is to cover unexpected financial events, like emergency home repairs, medical bills, or lost income, so you can avoid going into debt over these large expenses. Most financial experts recommend that parents save up at least 6 months’ worth of living expenses in an emergency fund. While it may take a while to save this much, every contribution helps. Try to pay into your fund with every paycheck.
Build a Household Budget
Developing a household budget is essential for meeting your savings goals and keeping your family out of debt. As you set spending limits for various expense categories, remember to account for extra medical visits, childcare, and a temporary loss of income. While it’s true that kids cost a lot of money, there are plenty of ways to save through every stage of their life!
Financial planning is important no matter where you are in life, but the arrival of a newborn necessitates it even more so. There’s no better time than the present to get your financial affairs in order. From tackling estate planning and setting financial goals to building a budget and establishing an emergency fund, the steps you take today will secure a long and happy future for your family!