Congratulations, you are expecting an addition to your family! I have just one word for you – Ka-ching!
Babies are expensive – we had 4 of them so I know this first hand. Here are some must-do tips for new parents.
Master the Basics
Every baby needs his/her own Social Security number. You will need this on your tax return to get credit for your new little tax deduction. Also you will need it to start a college savings plan. Typically that process starts at the hospital when the parents sign the birth certificate. However, just in case I have attached links to info from Social Security and an SS-5 application form.
Now that you have someone who will be completely dependent on you for everything they need, it is time to have a family budget and stick to it. Plan on your little person bringing new expenses home from the hospital. The Babycenter.com website has a great Baby Cost Calculator (https://www.babycenter.com/baby-cost-calculator) that can help you. Make sure your budget includes an Emergency Fund and that you budget for some fun too. A date night babysitter will be a lifesaver for new parents.
Even though your baby is brand new her stuff doesn’t need to be! She will never know that her darling new outfit previously looked great on her cousin or friend or some kid from Craigslist. Let the grandparents buy new, you can be a smart shopper and outfit baby on the cheap. A recent search found a barely used $500 top quality baby jogger for 200 bucks (think pre-owned Lexus).
Update your company plans and beneficiary designations. Sign up for Health Savings account (HSA) and pre-tax childcare savings accounts if they are available in your company plans. Also be sure to add Jr. to your health insurance plan. Now is a great time to increase your life and disability insurance too.
Plan for the Future
As long as we are talking about loss of life and limb, don’t forget one of the most important things you can do for your children – plan for what happens to them if something happens to you. A Will that names Guardians will protect your child from being subject to the court-ordered process that happens if you don’t. Sometimes these are not easy decisions and often there is no perfect solution, but do it anyway and keep the documents updated as your life changes.
Earlier I mentioned saving for college and you should start doing this right away. Don’t overthink it, just open a 529 plan account for your state. Start making automatic deposits with every paycheck. And don’t forget to let those grandparents know how they can contribute too. Plus 529 plan contributions can be tax deductible.
Babies are expensive, but they’re worth every penny. But my best advice to new parents has nothing to do with money – Sleep Now, you will need it!
Congratulations and let us know how we can help you in this exciting season of life.
David uses Values Based Financial Planning to align your financial choices with your most important goals and your most deeply held values. He has a comprehensive process to consolidate, coordinate and simplify your financial life in a way that brings you more confidence and clarity about your future. Learn more about David here.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The performance data given represents past performance and should not be considered indicative of future results.
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Two things should matter to retirees and near-retirees: income from investments, businesses, or social security, and how far that income goes to purchase goods and services. Taken in tandem, these elements will define the success of your retirement, offering you freedoms and flexibility in your later years or requiring you to return to work to increase your income. Steve Booren Steve […]