Financial Tips For Expecting Parents
Expecting can be stressful and confusing, especially if this is your first child. Reading this article will help to organize your thoughts and plan for this new, exciting journey. Read Financial Tips For Expecting Parents:
Create a Budget
As expecting parents, it is important to create a budget for your baby’s first year expenses. Make sure all things are considered, such as diapers, wipes, clothes, as well as one time expenses, such as the nursery. There are “baby cost calculators” online which can help with your estimations if you are unsure. It’s also important to consider delivery costs that aren’t covered by your insurance.
Read about The Importance of Budgeting here.
Along with creating a budget comes paying for childcare, if you plan on taking this route. There are several options available here, depending on if one parent is staying home with the child or if both parents are returning to work. It’s best to compare rates of childcare centers, as well as personal babysitters/nannies to ensure your budget is on track. One or both parent(s) will likely have a period without income, so account for that too. Having a plan in place and the budget prepared will help create peace of mind.
An emergency fund is another critical component in any financial plan. It is recommended to have at least three months worth of income in a savings fund in case of a job loss or if unexpected costs arise. This will also be helpful to supplement income during maternity leave.
Read How Much Is Enough for your emergency fund.
Creating a 529 Plan is a good idea if college savings is a priority. The money in a 529 plan will grow tax-deferred and withdrawals are free from federal income tax, as long as withdrawals are used toward tuition, room and board, or books and supplies. It’s never too soon to start saving. You can contribute extra income, or work with an advisor to determine an appropriate amount to save based on your college goals.
Create a Will
It’s important to have a will, which will dictate what happens to your dependents, should you pass while they are still minors. If you do not have a will in place, the government will decide who becomes legal guardian and where your money goes. It is important to use an attorney or a reputable software to create your will. Creating a “DYI” (do it yourself) Will can have consequences down the line, such as legal fees and high taxes on your estate. Be prepared and ready to name beneficiaries and a legal guardian, and be specific. If you are fearful of changes in your future, don’t worry. A will can be updated or replaced at any time.
Expecting a new child can be stressful but being prepared can help create peace of mind. Utilize family and friends who can offer advice based on their prior experiences. And always remember the importance of planning ahead. Click here to schedule an appointment with one of our advisors!