Planning for a Newborn? Good Financial Advice.
by Efin Advisor | June 1, 2009
July and August have the highest percentage of births for any month in America. For the soon to be parents: Congratulations! Parenthood is a wonderful and life-changing experience. As with most life changing experiences, as you may have determined after reading many of our posts, there are life changing financial aspects to deal with. The blog www.cashmoneylife.com recently had an article spotlighting the different things to prepare for as a parent, and we would like to highlight some of these, and some of our own, for you.
Check and update your life and disability insurance
Could your family survive a disaster if you weren’t there to assist them? What would happen to them if something happened to you? These are the reasons for life insurance as well as disability insurance and both of these become even more important as your family begins to grow. Make sure the beneficiaries of your insurance are your spouse and children and your policy is not outdated. You would be surprised at how often that happens. Make sure you have enough insurance to cover the expenses ahead so your new child has a fair shot if disaster strikes.
Budget, Budget, Budget
Babies are expensive and having a child is usually coupled with having someone stay home from work or hiring someone to take care of your children. Your household income is likely to go down with a newborn and your expenses will increase greatly. Children outgrow clothing very quickly, require new types of furniture, and require extra expenses than most, like doctors visits. Make sure you are ready to manage the costs of a new child and budget for the expense. Figure out what luxuries you could live without to find places to cut your normal household outlay. You probably won’t have time to go to the movies that often anyway.
Set up savings accounts
There are two types of savings you need to think about when your child is born. The obvious one is a college savings account. Degrees are more important than ever in the marketplace. Start planning early on so your child has every opportunity you can create for them. There is a constraint on this though. While it is very important to save for your children, do not completely give up on your retirement savings. Loans and financial aid exist for college students. The same isn’t true for retirement. Finding the right balance is as important as the act of saving itself.
Update your will
Like life insurance, people often neglect to update their will for new events in their life. Make sure the right people are inheriting your property, and ensure that your children are taken care of.
What troubles did you encounter when you first became a parent? Share your advice for people who are welcoming newborns!
Great post, but, as a mom, I have to say that budgeting for a newborn for the first time can be an exercise in futility! It’s difficult to budget not knowing exactly when your child will need new shoes or the latest learning doodad. I would say expect the unexpected and I guess you’ll always be prepared. I think it can be good to budget a chunk of money for unforseeables as this problem never goes away with kids and with every lifestage comes a new set of junk you need to buy!
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This post really reminds me of a commercial I saw the other day when there was a dad playing with his kids and the narrator said that “every day you’re reminded of a reason you need life insurance.” It can be very sad and eerie to think about life insurance because it reminds us all of our personal mortality but it is so important. It helps me to know that investing in life insurance doesn’t have much to do with death but rather “insuring” that the lives of those around you will be taken care of. Nothing like a newborn to remind you about the circle of life.
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Saving for college is obviously very important but I always feel so confused about how much to save. I could budget for the cost of college right now, but isn’t the cost of school rising? From what I read in the news it seems to be out pacing my income. Has anyone out there ever heard of those programs where you pay for college at a state school now and it freezes the cost of tuition? My friends did that for their daughter and it sounds like a good option but I don’t know much about it… Maybe saving for college and tips about that would be a good blog post for the future?
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One of the best investments I ever made for my wifes and my well being and sanity was to hire a night nurse. I don’t know if they have them all over or just in major cities but a friend referred me his and it was unbelievable. The biggest problem I came across as a new parent was getting a good nights sleep and my wife was constantly frazzled from having to take care of our child almost 24/7. The night nurse came around 8pm and stay with the child until 7am. She would quiet our son down, change his diapers, etc.. Not only did this give us a peaceful rest but it gave us peace of mind knowing my son was being taken care of.
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When looking at the birthing process holistically it can be easy to assume that anyone who wants a child can have one. As a woman who is reproductively challenged let me just say that this is not always the case. As such, I would suggest that people consider/budget for reproductive assistance. True many people will not need it, but when the doctor told me how much it would be to use assisted reproductive technology (or ART) you could have picked my jaw off the floor and I wish I had saved for this before. Also it’s important to budget for things like birthing classes.
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I think it is also important to see what you can do to negotiate hospital and doctors fees before the birth takes place. This practice can save quite a bit of money.
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