Parenting is an awesome responsibility that comes with virtually non-stop financial demands. Careful planning, discipline, and preparedness for unexpected expenses are a necessity from the day your newborn comes home. There are financial milestones associated with every stage of a child’s development, so the sooner you get started laying the groundwork, the better off you’ll be. By covering the basics of good financial management and not straying from the plan, you’ll be in a good position to attain your objectives. The key is to begin right away — the expenses associated with raising a child are growing larger every day.
Make a Will
If you’re a young adult, financial instruments like a will and health or life insurance policy may seem alien and far removed from the circumstances of your life. However, as a parent, you’re now heavily invested in planning for the future, and that means arranging your affairs carefully so that your family will always be well taken care of. Creating a will involves naming beneficiaries and determining the payouts to each, as well as deciding when each will be made. There are online programs that can walk you through the process but bear in mind that if you have a considerable number of assets, having a legal professional handle things is probably in your best interests. (Bear in mind that determining your net worth and identifying assets means you’ll need to know the value of your home and other properties you might own.)
You and your spouse may be accustomed to getting by on bare-bones health insurance through an employer. That all changes when your first child arrives. It’s time to ramp up to a family health policy that will cover the needs of the entire family and provide enough coverage to protect you if someone is hit with a severe medical condition. It’s a must when you become a nuclear family, but be prepared for a larger withdrawal from your pay, as well as a higher deductible and payouts. If you have a baby on the way, be sure to inform your employer at least 30 days before the projected birth date to ensure your newborn is eligible for dependent benefits.
Child care is one of the most daunting expenses you’ll face as a parent. Many parents are unable to stay home with their child and have to return to work. Unless you have a relative, friend, or low-cost babysitter standing by, you’re looking at a few years of child care expenses. The importance of saving for this hefty financial demand comes into stark focus when one considers that families pay an average of $11,000 a year to send a child to daycare. It may be worthwhile for you or your partner to investigate the possibility of working from home, or starting an at-home business if child care is simply out of the question.
Whether you’re the primary breadwinner or a secondary contributor to the household coffers, it’s important that at least one of you has a life insurance policy. Life insurance provides a valuable safety net in the event that you die unexpectedly, and it can be used as a source of asset protection and even provide secondary income if necessary.
The average student loan debt as of 2017 stood at just under $40,000. That’s a sobering fact for families that haven’t saved enough to finance their children’s college education. Have income set aside automatically in savings or investment accounts, and consider certificates of deposit or stock and bond mutual funds to grow your college savings.
Diligent planning and the steady building of funds are key to your family’s financial success and being ready for the ongoing challenges of raising a child. Begin saving as soon as possible, and consider consulting a financial planning and tax professional along the way to ensure you’re on the right path.
Guest Post by Sara Bailey, thewidow.net