As September arrives, families gear up for the new school year, but for adults without kids, it may not hold much significance. However, if you're thinking of starting a family, preparing your finances is crucial. Parenthood brings immense joy and responsibility, and having a solid financial plan in place is essential. This guide will help you get your money in order before your little one arrives.
Check Your Money Situation:
Take a close look at your finances. Make a simple budget to understand how much money comes in (income), how much goes out (expenses), and how much you save each month. Knowing where your money goes will help you make better financial decisions. Even if you aren't quite ready to begin growing your family, check out this guide on Managing Money as a Couple by clicking this link.
Estimate Baby Expenses:
Babies need things like diapers, formula, clothes, and nursery items. Research and estimate these costs to understand how much you'll need. Consider buying second-hand items or asking friends and family for hand-me-downs to save money. If you’re making a registry, now is the time to budget for materials yourself, just in case. Be prepared to review your budget again with these additional expenses.
Save for Emergencies:
Parenthood comes with surprises, like unexpected medical expenses or baby-related costs. Create an emergency fund by saving some money every month before your bundle of joy arrives. Aim to have enough to cover three to six months' worth of your living expenses. This way, you'll be prepared for any unforeseen events. Don’t forget to account for baby expenses in your new living expenses! Your Emergency Fund: How Much is Enough?
Plan for Parental Leave:
Check your workplace policies for parental leave. This time off is important for bonding with your baby. Plan how you'll manage your finances during this period, as your income might be reduced. Head back to the budget review step to ensure you are well prepared for this time period.
Review Insurance:
Make sure you have good health insurance that covers pregnancy, delivery, and your baby's healthcare. Consider getting life insurance too, which can provide money to your family if something happens to you or your partner. It's a safety net for your loved ones. Need more detail? Check out Insurance Needs Assessment: When You're Newly Married OR Insurance Needs Assessment: Married With Children.
Make a Will and Choose Guardians:
Speaking of safety nets, if you don’t have one already, you should create a will. Creating a will is like making a plan for your family's future. It's essential to decide who will take care of your child if something happens to you and your partner. Choose someone trustworthy and responsible as their guardian. This is also the time to review your beneficiaries, and include your new child as your recipient of any assets.
Start Saving for College:
Although college may seem far away, starting to save early can make a big difference. Look into college savings plans, like 529 plans, which offer tax benefits and help your money grow over time. Small contributions now can add up to a lot later, especially with the increasing cost of college. Consider the Countdown to College by clicking this link.
Get Professional Financial Help:
If you're feeling overwhelmed or unsure about your financial plan, consider talking to a financial planner. We can offer expert advice and help you make the best decisions for your family's future. Let’s set up a meeting to get you on a path towards success. To set up a meeting, click here to access our contact page.
Getting ready for parenthood is an exciting journey, and being financially prepared will give you confidence. By following this simple guide, you'll be better equipped to welcome your new family member and enjoy the beautiful moments that lie ahead. Don’t forget to take care of yourself, too!
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer’s official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investing in any state’s 529 Plan.