6 Financial Tips for New Parents
Life has (or will soon) changed as you know it, but it has certainly changed for the better. Parenthood brings with it a whole new world of financial considerations and responsibilities. It’s time to give your finances a refresh and prepare the nest for your most precious asset so that you can relish this joyful time.
1. Update your health plan
Although your health care plan may have been covering all of your doctors visits and hospital care during the pregnancy and birth of your new bundle of joy, they won’t automatically add your baby to your health care plan. As a matter of fact, you have 30 days to get your new child on your plan. No need to wait for open enrollment – this is considered a life event that allows you to make changes out of the regular cycle. You may even want to re-examine all of your health care options and switch to a different plan, if that makes financial sense.
2. Build your estate plan
There has never been a better reason to put together your will and other estate planning documents. It’s not just you and your spouse anymore, you’ve got someone else special to care about and you need to know that she will be cared for in an unexpected circumstance. Get the Big 4 Documents taken care of: Will, Living Will, Health Care Power of Attorney and Financial Power of Attorney. These are the documents used to direct others on what should happen in an emergency and a will is the only place that you can name the person who will take care of your child, if something should happen to you.
3. Search for insurance
When it was just you and your spouse, you may not have needed life insurance. You may have surmised that if something were to happen to one of you, the other could continue in their current lifestyle. Children change this equation. As a team, you are either doulbe income or one of you is caring for the child. If something were to happen to one of you, after children, you would need to replace that income or determine a way to continue to care for the children (daycare, nanny…), not to mention paying the mortgage and education costs. It’s time to look for term life insurance for at least 20 years that will protect you until your child is through college.
4. Save, save, save
Kids are expensive. Not only do they need diapers and formula, but, eventually they will want to be on baseball teams and take karate lessons. If they’re anything like my two boys, you will soon be the #1 most beloved customer at the grocery store. Take some time to begin to work on your budget to make sure your Freedom Fund is fully funded and then some. Because you want to give your children everything.
5. Save more with a 529
College is expensive. The earlier you stat to save, and ask friends and family to help, the better off you will be prepared for the second biggest investment of your life. Check out this article, Save Now or Borrow Later, to see why saving is SO much less expensive than borrowing. Then, use this checklist to find the 529 plan that’s right for you, 4 Things You Must Know Before Opening a 529 Plan. And then, open a 529 for your new baby and start saving for his future!
6. Update your beneficiaries
Now you have a new beneficiary! Make sure that as part of your estate planning you understand how to include your children properly on your beneficiary forms. When you name a beneficiary on a document, like a retirement fund, it supersedes your will – so it’s important to check these regularly as things in your life change. You name beneficiaries on employer retirement plans, IRAs, insurance, annuities and some other investments. Check it all out so that you know you are truly planning to protect your family.
For new or expecting parents, Financial Planning can ensure that you are prepared for the milestones parenthood brings, and safeguard your most precious asset.
If it’s time to get your portfolio on-track for financial success, schedule a call with me to start the discussion.