There’s nothing like the joys of becoming a parent…except for the stress and anxiety that comes with it. Some parents can roll with the punches—but others are better off planning each detail. Regardless, of which camp you fall, here is a financial checklist for new parents with things to do shortly after welcoming your new bundle into the world.
Baby’s First Week:
Birth Certificate and Social Security card
The hospital should provide you with the necessary paperwork to get your child’s Social Security number. A birth certificate application can be completed online through the Colorado.gov website.We simply filled out the application from the hospital and took it to the Vital Records office in the Denver Tech Center. It was a piece of cake—and way better than the DMV!
Add your baby to your Health Insurance
Most insurers allow at least 30 days from your child’s birth date to add them to an existing health insurance plan. We simply called our provider and told them the exciting news! Once you receive your child’s SSN, you should relay that information to your insurer as well. Also, when you call, ask them about your individual and family deductibles! The year your baby is born is a great year to have everyone’s health checked because you’ll likely already meet your deductible.
Baby’s First Month:
Build a Baby Budget
It’s easy to get caught up buying every baby accessory and onesie (they’re just so cute and tiny!). All things are good—in moderation. Add a “Baby Stuff” to your monthly budget so you have some leeway, but aren’t breaking the bank! We added about $100/mo during the first year (mostly for clothes and other accessories) and an additional $50/mo each year after. As your baby grows, there will be more activities that come with a cost.
Plan to Increase Your Emergency Reserves
Babies aren’t cheap—and they only get more expensive. Make a plan to increase your cash reserves. Be sure it covers at least your health insurance, home owners and auto deductibles. We are planning to meet our family medical deducible every year on top of keeping 3-months of our monthly budget in cash. It’s always better to over-estimate how much you have in reserves!
Adjust Your Beneficiaries
Assuming you already have life insurance (if you don’t—now you have a reason to!), you may want to add your child as a beneficiary. The same goes for your 401(k) or other retirement accounts. This will ensure your child has access to funds, should the worst occur.
Consider an HSA/FSA
Health Savings Accounts or Flex Spending Accounts may help you cover health expenses or child care costs and save money on taxes.
Plan for Child Care
If both parents plan on returning to work, start looking for the right day care or nanny for your little bundle. Plan trips to the day care or meetings with the nanny so that you’re comfortable (at least as much as possible) on your first day back to work. Also, add the new cost to your monthly expenses! If you’re trying to figure out if it’s worth it to go back to work, here’s a way of thinking about it. Is your monthly, take home income at or less than your day care? Then you may consider staying at home. But this decision is far more than just about money!
Baby’s First Year:
Get a Will!
No one likes to think about it. But it’s time to put on your parent pants and consider what happens if the worst happens. Most importantly, designate a guardian so the courts don’t have to (and your parents aren’t always a good option!). Your will and guardian aren’t the only documents you need, but they’re a good place to start. I have a network of young, family attorneys that are in the same phase of life as my clients. This way, they know exactly what needs younger families have and how to protect them properly.
Add to Your Insurance
Now that you have a dependent, make sure your life insurance covers their future costs (like college). A good way to estimate this is—add up all your debts, future expenses and costs for child care. And don’t forget future cars, college and even weddings. Also, you probably only need 20-30 years of term insurance. Any other type of life is being sold to you and is probably more expensive! Don’t forget about disability insurance too. Most employer offer disability insurance that offers a percentage of your regular salary if you’re unable to work.
Save for ________
It’s easy to forget about the future. But in order to have a tree in 15-20 years, you need to plant the seed today. College is expensive, but it’s more manageable if you start saving early. You can bet that college tuition will probably double in the next 18 years when your baby leaves the house. The best way to cover that is to plan ahead! And stay on top of your retirement plan so your kids don’t have to support you later in life.
Adding to the family is only the beginning, but this financial checklist for new parents should help. Remember, the right decisions early in life can make a world of difference for financial success.
John started his investment career in 2012 after graduating from Colorado State University with a bachelor’s degree in Financial Planning. His desire is to provide care and guidance for individuals and families through all aspects of their financial life. Learn more about John here.
https://prosperion.us/wp-content/uploads/2016/10/pregnant.jpg5001000John Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngJohn Booren2016-10-31 12:04:122021-02-22 12:38:42Financial Checklist for New Parents
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