When your new baby arrives, your finances and household budget will probably be the last thing on your mind as you adjust to your new lifestyle as a parent. However, it should be very important as you plan your child’s future. Here’s why, courtesy of Nuthatch Naturals.
Revisit Your Insurance Options
Your insurance will change when your new baby is born to include him/her in your health insurance policy. Importantly, this should be done within the timeframe specified (usually within 30 days) to ensure your child is covered if they require medical assistance from the time they are born.
Don’t Forget About Life Insurance
No one likes to picture a time when they might not be there for their kids. However, the sad reality of life is that the unexpected can and does occur. Therefore, the wise thing to do is to ensure that you have a life insurance policy in place to take care of them financially if you are no longer able to do so. You should include your new child as a beneficiary. Also do this for any retirement plans you may have, such as a 401k or IRA.
Create a New Budget
Your budget is most certainly going to look different now that your little one is here. After all, you have a whole new person to account for. And while they may still be so tiny, your expenses are likely to escalate dramatically because baby essentials aren’t cheap. Furthermore, you don’t just need to budget for the essential day-to-day costs such as clothes, toys, diapers, baby food, etc. But you’ll also have to look to the future and put aside funds for their college tuition, for example. Or for when they get their driver’s license and need a vehicle.
Saving for College
Speaking of college, it’s hard to imagine that one day your child may say goodbye and take off for college. But it will happen! One of the best things you can do to start saving for college is set up a 529 savings account. It’s not tax deductible to put money in a 529, but any investment earnings grow tax free. Saving money now is much less costly than borrowing money later in student loans.
What about Opening a Contingency Account?
A contingency account or an emergency savings account is also excellent for unexpected emergencies that may crop up from time to time. For example, you may need to do extra maintenance on your vehicle. Or you may need additional funds for an unexpected health crisis.
Save Up for a Down Payment on a Home
Suppose you want to buy a bigger home down the line to accommodate your family as it expands. Then putting funds away so that you can put a significant down payment on your next home may be your next priority. Furthermore, depending on the home loan you choose and the down payment you make, this could significantly impact your monthly mortgage payments (provided that your mortgage is recast).
Finding Ways to Earn Additional Revenue
Of course, it shouldn’t be as challenging to put additional money away if you can generate extra revenue on the side. For example, by running your own business. If you want to reap the benefits of not paying as much tax, then an LLC is most assuredly the way as far as business structures go. Moreover, you can also save quite a bit more by enlisting the help of a formation service to register your new business for you instead of going the usual lawyer route. However, before choosing a formation company, spend some time researching the cheap LLC online formation to ensure your money’s going to a reputable business.
In summary, planning financially for your growing family should be one of the first things to do when you have a moment free. And while this may be a time-consuming and tedious exercise to do when so much is new to you, it’ll be very worthwhile when you know you don’t have the your finances to worry about anymore.
This article was contributed by Colleen Stewart of Playdate Fitness in Orlando, Florida.
Image via Pexels.