Have a baby is one of the most exciting and slightly terrifying times in a couple’s life. You go over baby names, what color to paint the nursery and go shopping for the cute clothes with sayings on them. This is all fun stuff.
Remember life is about to change completely.
It is important to take stock of your finances, while you are take stock in diapers. According to the U.S. Department of Agriculture, it will take more than $245,000 to raise your child from birth to age 18. This is a major chunk of change for everything from diapers, formula, and new clothes to the future expenses like school and family vacations.
To help put your mind at ease, here are some tips to help new parents plan and get financially prepared for your baby:
1. Set A Budget: Browsing through baby stores and websites can be a lot of fun and it’s easy to get swept up in picking out cribs, rockers and stuffed animals. While you want to have all the essentials for the baby, make sure you are shopping smart. Do you really need the Cadillac of strollers? Could you use hand-me-downs instead of buying new stuff? You are going to only need it for a few months to a year, so there isn’t a need to go into debt buying all the high-end nursery things. Set a budget and stick to it.
2. Prioritize Your Savings: Yes, you should start saving for college, but saving for your retirement is just as important. Develop a solid financial plan that allows you to put money aside for you and your kids. Once you hit retirement age and can’t work anymore, but you don’t have enough to live on, who are you going to turn to? Talk to your financial advisor to help plan now and have a well-balanced financial plan for the future.
3. Establish A Will: If something were to happen to you or your spouse, what would happen to your child? Wills are not just for the top 1%. Anyone with children should have a will drawn up to make to make sure that your wishes are carried out if anything happens to you.
4. Apply For A Social Security Number Sooner Rather Than Later: A Social Security number is an important document to access health and human services benefits. It is also required to claim your child as a dependent on your income tax return. Your child’s social security number will be needed to open a bank account or buy savings bonds for them. You should apply for a social security number when you apply for your child’s birth certificate. You should go to the Social Security Administration website for information on when you can apply.
5. Review Your Employer Benefits: Do you know your employer’s maternity or paternity leave policy? How long do you have to add your baby to your health insurance (usually 30 days) and what will it cost? Does your employer offer life insurance benefits for children? You should take a look at your benefit plan before your child is born so you know what to expect and what you need to update.
6. Get Life Insurance: Life insurance helps ensure that you and your partner could afford to pay your mortgage and avoid foreclosure or bankruptcy if something were to happen to either of you. Now that you have a baby on the way, now might be a good time to think about your current coverage. If something happened to you or your spouse, would you be able to afford child care or save for your child’s future education? Life insurance will help protect your family’s financial future, even if you are no longer around to do so.
You may also want to consider getting life insurance for your little one. Insuring your child will generally be less expensive in their younger years and it will help protect their future insurability. By having an insurance policy for your child now will help provide a nest egg of their own that can be used for educational expenses or even put toward a down payment on a home further down the line.
We at Frimark/Keller & Associates send our warmest wishes to you and your growing family. We have been helping the residents of Schaumburg with all of their insurance needs since 1910. Give us a call at 847-907-4520 if you’d like a quote for life insurance.