Few things change your life as much as starting a family. Along with anticipation and joy, many couples encounter feelings of stress and anxiety over their new responsibilities and growing financial obligations. From medical bills to college funds, there is a lot to think about. Ensuring that you’re prepared and knowledgeable about what’s to come gives you the peace of mind you need to enjoy this new journey.
Review your health insurance.
Once you find out baby is on the way, prepare yourself for an onslaught of doctors appointments that will last for the next 18 years. Make sure your new family is protected with good insurance coverage. Price policies and discuss deductibles, flex spending and HSA accounts.
Talk to your employer.
In order to properly plan for baby, you have to know what’s on your financial horizon. Talk to your employer about what the company offers in terms of maternity leave and benefits. Will you receive paid or unpaid leave? Will you have job security? How long can you take off? Answers to these questions will help you plan and adjust your budget accordingly.
Build up your emergency fund.
Putting aside money for savings is always important. When you know you’re having a baby, it’s even more so. Reassess your finances and budget. Determine how much more you can put into your savings account each month. If it’s possible, try and double your savings contribution.
Carefully revise your family budget.
In addition to moving additional funds into your savings account each month, your budget will most likely require a full overhaul. Now is the time to cut back on unnecessary spending; take a look at where your money is going and adjust accordingly. Over the next several months you’ll be spending quite a lot more than you anticipated in preparation for a baby.
Update your will and life insurance.
If you haven’t done so already, create or update your will to include a guardian for your child(ren). Consider adding life insurance to your personal insurance portfolio.
Working vs. stay-at-home parent.
With the high cost of daycare these days, many moms and dads are now considering the possibility of staying home. Review your finances and find out what your monthly budget would look like with only one income. Should you decide to continue working, prepare a new budget and compare scenarios that include childcare and related expenses.
Think about taxes.
Review your taxes to see if you qualify for child and dependent care tax credit or an earned-income tax credit. Also, remember to adjust your tax withholding to reflect a dependent child. This gives you a larger paycheck to help pay for baby expenses.
Open a separate savings account.
For some couples, segmenting their savings works best – emergency fund, dream-house fund, baby fund. Consider opening a separate fund for your baby-to-be to help you more easily understand where you are in the savings process and how far you need to go.
Start a college fund.
Just like retirement, it’s never too early to start saving for your child’s educational future. With ever-inflating tuition and fees, putting money aside now is a smart investment.