Financially Planning When You’re Expecting
Introduction
There is no doubt that starting a family is one of the most radical changes that can happen in a lifetime. Children affect not only your social life, and the flow of your weekly schedule, but they also affect your finances. If you are expecting or desire children, read along to discover some key actions you can take to prepare for a bundle of joy.
Consider Insurance
This may be a good time to investigate purchasing insurance if you have not already. If you have insurance already, review your current plans to decide if you need to adjust for greater coverage. Life insurance is important for protecting your family’s financial situation if you were to pass. Health insurance is also important to consider, because children often have many doctors visits especially in their early years. Disability insurance is another measure of protection if you were to get sick or injured.
Create a Will
This is a good time to review your estate and ensure everything is set up correctly to transfer to your chosen people. This includes wills, potential trusts, powers of attorney for healthcare and property, and a living will. Having a will written is a measure of protection for your partner and children to receive your assets if you were to unexpectedly pass.
Start Saving
Saving and investing your money as early as possible will benefit you so much in the future when you want to pay for your child’s education or travel with your family. Compound interest is your greatest tool when saving for these future costs. Consider investing in a 529 Plan if you desire to fund your children’s education.
Save Your Out-of-Pocket Maximum
Having a baby is an expensive feat when considering medical costs. You should expect that you will hit your insurance deductible and reach your out-of-pocket maximum. To prepare for this, it is a good idea to know your maximum and save that amount. Make sure you know your maximum as listed on your health insurance plan, and research what expenses could come up in labor & delivery.
Research Your Maternity Leave
For my working parents, it is a good idea to research maternity/paternity leave and what that entails. Know how long it is, if you are paid or not, and any other details included by your employer. You and your spouse may need to consider adjusting how much you are spending and saving depending on your leave.
Talk To Your Partner
This is an important time to talk with your spouse about how your life is going to change.
Discuss:
- How will your financial situation change?
- Will either of your work situations change?
- Will one of you stay at home?
- How long will you be single or partial income?
- How will you make this work in your budget as a single or partial income family?
- What expectations do each of you have? Are you on the same page?
Think Simple
Regarding what you should purchase for your baby, there are many opinions. I believe simplifying and having a “less is more” mindset is less overwhelming for new parents. There are so many creative ways to affordably purchase what your baby needs as well as the special things you may want. Consider buying from secondhand stores, shopping sales, creating a registry that friends and family can purchase from, and making a list of just the basics. It is also important to remember that you can buy what you need as you go into the newborn stage.
Conclusion
There are so many factors to consider in preparing financially for a child. It is wise to consider how your life is going to change and taking the steps to financially prepare. I am no parent yet, but I’ve heard the love and joy is unexplainable. I hope that financially preparing can free up the mental load to allow those first moments with your new baby all the more memorable.
Matt’s Corner
