Is there a new Mom in your life?
By: Laura Chiesman
Financial Planning Issues for New Parents
As you prepare for life with your new child, there is so much to think about – baby names, mom and baby’s health, the latest in feeding and vaccinations, and picking and choosing from the endless supply of “must have” baby items.
On top of all these important, and fun, issues it’s time to prepare a new financial plan for your family or make any necessary changes to your existing plan. You’ll want to consider how your baby will affect your budget, make sure you have adequate insurance, protect your child’s future with a well-thought-out estate plan, and determine how having a child will affect your income taxes. I like the one-step-at-a-time approach, so a good starting point is the budget.
Expenses that typically increase when you have a baby
- Your grocery bill: Diapers and formula (you may use some even if you’re breast-feeding) are very expensive. Later, when your baby turns to solid food, you’ll have to figure in the cost of baby food.
- Your housing costs: If you don’t already live in a house or large apartment, you may find yourself moving once your baby gets old enough to take up a lot of space with toys and equipment.
- Your transportation costs: If you have a small car or a two-seat convertible, you may find it difficult to fit in a car seat, and you may need to buy a new car.
- Your clothing and household expenses: You’ll find yourself spending less on yourself and more on your child now that your budget has to stretch. You’ll spend a lot initially to buy essentials for your child and then spend a bit more each month than you’re used to for items your child needs.
- Medical expenses: You’ll probably pay a co-payment for each of these trips unless your health insurance plan covers 100 percent of well-baby care. Your health insurance premium may increase as well, unless you already had family coverage for you and your spouse.
- Cost of child care: Whether you look for full-time day care or hire an occasional baby-sitter, you need to plan for the impact this will have on your budget.
The initial outlay for your baby can be quite high. You’ll have to equip your home with baby furniture, a stroller, a high chair, an infant seat, a car seat, bedding, and clothing, among other items. Of course, you want your baby to have the best, but what IS the best and what do you really need? Ask other parents for recommendations, then shop around. If you start shopping far enough ahead, you can find good deals on quality items in discount stores, department stores, and superstores.
Don’t buy more than you initially need for your baby; your friends and relatives may shower you with gifts once the baby is born, and you won’t need to buy as much as you thought you would.
Costs of day care
The cost of day care will depend on where you live, how many children you have in day care, how old your children are, and what type of child care you choose.
Saving for education
When you’re ready to address this expense there are quite a few options and lots of great information – start with this blog.
Saving for emergencies
If you don’t have an emergency fund, now is the time to set one up. If your child gets sick, your car breaks down, you need to move unexpectedly, or you lose your job, you can dip into your emergency account. An emergency account should normally contain an amount that equals three to six months’ worth of living expenses.
Enjoy all the moments along the way!
Well, that’s enough for now! In future blogs, we’ll talk about Estate Planning for New Families, Insurance for Families, and Income Tax Considerations. Get ready to experience the greatest love and joy of your life!
We know balancing this lifestyle change can be challenging, contact our wealth management services firm in Satellite Beach, FL – Melbourne/Brevard to speak to one of our WealthCoaches™. They can help guide you throughThe Five Stages of Your Financial Life, give us a call at (321) 773-7773 or visit our website at www.firstwavefinancial.com today!