Baby on Board: 5 Financial Tips for New Parents
Becoming a new parent can be both exciting and intimidating. As you enter this new chapter you want to make sure you’re doing your best to take care of your family. When it comes to your financial outlook you have a host of new considerations and adjustments to your needs.
Here are five tips to help you get your finances on track so you can focus on your new baby:
#1: Updating Your Budget
It’s no secret raising a child is expense. According the LendingTree, parents will spend an average of $237,482 (from birth - 18 years old). It's important to consider expenses beyond everyday essentials such as food and clothing. You should also consider new expenses such as medical bills, education, safety equipment, child care, etc. Don’t forget to factor in how your variable expenses such as increased water and electricity usage will be affected.
#2: Establish an Estate Plan
If you don’t have an estate plan in place this is the time to make one. If the unexpected happens, you want to make sure your loved ones are taken care of.
Review and update your beneficiaries for all of your financial accounts. You may also consider adding a contingent. If you’re working with an estate planner and financial advisor, it’s always ideal to make sure everyone is on the same page when it comes to your estate plan to ensure all aspects of your financial plan align.
#3: Review Your Insurance
Start by contacting your health insurance provider to update your coverage to ensure your child is covered under your plan.
Next, you’ll want to look into life and disability insurance:
Life Insurance In the event that you or your partner dies, life insurance will provide a pay out to your beneficiaries. This will help to ensure your dependents are financially secure in the event of your passing.
Disability Insurance This coverage will provide income to support your family should an event such as illness or injury make you unable to work. Theses are usually available through employer plans.
#4: Create an Education Plan
The earlier you establish an education plan, the more time you will have to accumulate funds. You can open a 529 plan and set up monthly contributions to start saving. There are several types of savings accounts. You can set up a meeting with your advisor to discuss your options.
#5: Review Your Taxes
You may qualify for additional tax benefits such as a child tax credit. You should consult with your tax professional for advice and make adjustments to your taxes and withholding as appropriate.
https://www.lendingtree.com/debt-consolidation/raising-a-child-study/#18yearcosts
As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover education costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state.
The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. These policies have exclusions and/or limitations. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.
Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. No investment strategy can guarantee your objectives will be met. Past performance is no guarantee of future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
