September 15th, 2020
New Parent? Here are the Financial Precautions to Consider Now.
So, you’re thinking about having a baby?
The most obvious financial impact you will come across is right at the beginning with maternity/paternity leave. Talk to your current employer to figure out the logistics of taking leave and any additional benefits the company provides for new parents in their workforce.
Then, work with your health insurance provider to see what costs they do cover and what will need to come out of pocket. They can also provide guidance on when the baby needs to be added to the policy and what the cost of adding them to your plan will be.
You want to ensure the insurance coverage is continuous in order to prevent any uncovered expenses related to possible complications during and after the birth.
On the personal side, begin adjusting your current budget to anticipate the baby’s expenses. Like most life events, this will cause you to reassess your finances and current plan. But, using your current household budget as a blueprint and adding in the most obvious new expenditures should give you a good idea of what to expect. These will be purchases for items like diapers, formula, baby clothes, and childcare.
On the estate and insurance side, though this may seem premature (and a little daunting), you should also create and/or update your will to cover guardianship of the baby and plan for any money they would receive.
This is crucial for parents.
In the event you were to pass away, having the right guardians in place will ensure your child’s well being. From a financial standpoint, review your life insurance policies to make sure coverage is adequate. Then, include explicit instructions for how any money is to be spent.
For example, at age 16 can they withdraw money for a car?
Is there enough to cover living expenses and the cost of college?
After college, how soon can they use the money towards a down payment on a house?
We believe it is better to get a headstart on this process before your baby is born. As always if you have any more questions or would like help with this process don’t be afraid to reach out to our team.