What to Expect (Financially) When You're ExpectingLife Events
Having a baby is one of the most exciting, awe inspiring, and slightly terrifying times in a couple’s life. You’re adorably arguing over baby names, painting the nursery, and shopping for cute onesies with clever sayings on them. It’s all good stuff.
Just remember…life is about to completely change!
That’s why it’s important to take stock of your finances, too, while you’re also stocking up on diapers. Because according to the US Department of Agriculture, it takes more than $240,000 to raise a child from birth through age 18. That’s a major chunk of change for everything from diapers, formula, and new clothes to future expenses like education and family vacations.
So to help put your mind at ease, here are a few tips to help new parents plan and get financially prepared for baby:
1. Set a budget
Wandering through baby stores can be a lot of fun, and it's easy to get swept up in picking out cribs, rockers and cute stuffed animals. But while you obviously want to have all the essentials for baby, make sure you're shopping smart. Do you really need the Cadillac of strollers when a less-expensive one works just as well? Could you use hand-me-downs instead of buying brand new stuff? Remember, you’re only going to need it for a few months to a year anyway. So there’s no need to go into debt buying that solid walnut nursery ensemble. Set a budget and stick to it.
2. Prioritize your savings
Yes, starting a college savings fund early on is vital. But saving for your retirement is important, too. Developing a solid financial plan that lets you put aside money for your kids and yourself is essential. After all, if you hit retirement age, can’t work anymore, but don't have enough saved to live on, who are you going to turn to? So talk to a financial advisor to help you plan now, and have well-balanced financial options down the road.
3. Establish a will
If something were to happen to you or your spouse, what would happen to Junior? Wills aren’t just for the 1%. Anyone with kids should have one drawn up 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
Take advantage of your new income tax deduction! A Social Security number is an important document to access many health and human services benefits, and is required to claim your child as a dependent on your income tax return. Your child also may need a number if you plan to open a bank account or buy savings bonds for them, get medical coverage, or apply for government services. You can apply for a Social Security number for your baby when you apply for your baby’s birth certificate. Check out information on the Social Security Administration website now so you can apply as soon as possible.
5. Review your employer benefits
What’s your employer’s maternity or paternity leave policy? How long do you have to add your baby to your health insurance and what will it cost? Does your employer offer Life insurance or dependent childcare benefits for kids? Take a look at your employer benefits before the baby comes so you know what to expect and which benefits need updating.
6. Get Life insurance
When it was just you and your spouse, Life insurance helped ensure your partner could afford to pay the mortgage and avoid foreclosure or bankruptcy on a single income. Now, with a new baby on the way, you may want to rethink your Life insurance coverage. If something happened to you, will your spouse be able to afford child care or save for your child's college fund? A Life insurance policy may help you protect your family’s financial future, even if you're no longer around to do so.
In addition to Life insurance for yourself and your spouse, you may want to consider getting Life insurance for your little one. Insuring your baby will generally be less expensive in their younger years, and it can help protect their future insurability. You’ll help provide your child with a nest egg of their own that can be used for educational expenses or even to put a down payment a house further down the road.
Life insurance, annuities and accidental death insurance issued by Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.