You’ll have spent nearly a quarter-million dollars on your little bundle of joy by the time your baby is 18. But few things are as life-affirming as they are expensive to raise, and bring as much real gratification as watching your child grow.
Prioritizing personal finance as soon as you start planning to add a baby to your family or as soon as you find out that you’re expecting it will help you set up good habits and make the most of your income. In rough chronological order, here are 9 personal finance tips to help ensure a bright future for your kid.
1. Create a budget for the arrival of your baby
If you’re a first-time parent or if it’s been several years since your last child, you might be clueless about the first-year cost of baby spending. BabyCenter.com has a calculator for baby costs that can help you predict your first-year expenses. See if one parent stays home with the baby, make sure the new budget allows for time off from work after conception, or a drop in income.
2. Start now if you need childcare
You need to start evaluating your daycare choices now if both parents retain their paid jobs. Good facilities often have waiting lists, and options such as whether your employer has a Flexible Savings Account (FSA) that you can use to pay for childcare using pre-tax dollars should be explored. Know what to do to use both the FSA and this tax credit for child care tax credit.
3. Quash Debt and Establish an Emergency Fund
Work to eliminate credit card debt as soon as you plan on having a child, and do your best to save on an emergency account at least three months ‘ living expenses. When one parent quits work after the baby arrives, try saving six months ‘ living expenses before he or she stops working.
4. Estimating the costs of prenatal care and delivery
If you have a standard employer-provided health insurance plan, maternal and delivery care would cost about $2,250 out of pocket for an uncomplicated birth. Ask HR or your insurer if they have current figures on prenatal care and delivery out – of-pocket costs so that you can bring those expenses into your personal finance program.
5. Plan an Extensive Insurance Analysis
Bearing in mind your growing family, you should check your requirements for life insurance and disability insurance. Term life insurance is affordable and appropriate if you’re young. With your employer, you may be able to purchase disability insurance. If you don’t know how much protection you need it will support online calculators.
6. Render your wishes
It is essential, however emotional this task may be. You need a will to nominate your child(ren) as guardian, and you don’t need to know your offspring’s name to make a will. Make an appointment with your lawyer or ask him / her to recommend a lawyer who can help.
7. Start purchasing baby gear
You just don’t need it all. Ask a two-year-old’s parent what baby gear they used, and what dust collected. You’re marketed as never before when you’re expecting to, and it’s not easy to know what’s needed and what isn’t. Register for gifts with major retailers / websites in order to avoid repeat gifts and to be bothered with returns.
8. Place cash gifts in a 529 account
Most states offer 529 plans to help families save for college, education savings plans. In most cases, it doesn’t affect your choice of school by which state your 529 plan is in. This policy pays for tax-free growth and college deductions, and some contributions may be tax deductible.
9. Prepare for your health plan to enroll the baby
After your baby arrives you will have 30 days to put him or her on your health insurance plan. Get the paperwork and fill it out as much as you can before birth so you’ll have to do less once he or she’s here.
Remember the sooner you start saving for college the better after Your Baby Arrives. When it comes to saving for tuition, time plus compounding are your best friends. But bear in mind also that saving for retirement is more important than saving for college, if anything. They don’t offer retirement scholarships.
Once you bring a child into your family, personal finance takes on a new aspect. Start early, plan carefully, and the financial bumps that come with expanding your family can be minimized. Mint offers many great personal financing tools that can help you budget, track expenditure and keep track of what you save for your child’s education and retirement.