Money Tips for New Parents
Money tips for new parents or for people getting ready to have kids
Becoming a new parent is a time filled with life-changing moments of love, wonder, sleeplessness, and stress. And it is that stress of becoming entirely responsible for another human being that is plenty worrisome without any added financial insecurities occupying your mind. Here are some of our money tips for new parents so that the only thing keeping you awake at night is your bundle of joy.
Budget your expenses
Our favorite money tip money tips for new parents or for anyone for that matter, is to set a budget and ideally stick to it. However, the nice thing about setting your new baby budget is you don’t have to be too upset if you don’t hold to it perfectly. Becoming a parent for the first time is an experience that will come with expenses you didn’t expect. The important thing is that you learn from each month and develop your budget to work for your family. Before your baby arrives, it’s a good idea to set aside money for all the costs, both expected and unexpected. Then, plan out your monthly income, savings, and expenses to protect from overspending. An addition to the family means a significant increase in monthly expenditures, so being prepared is key.
Set your bills to autopay
During the first few months of being a new parent, most people find themselves unable to think about anything other than their child. As a result, this is the time to try simplifying the other areas in your life so that you don’t have to split your attention. Setting your bills to autopay is a great way to cross things off your monthly to-do list. Another option to consider is to look into subscription plans for baby essentials. The Honest Company, Bluum, and Bump Boxes are just a few brands that deliver products for baby and parent right to your door. There are tons of resources out there for new parents to save themselves a shopping trip and some extra money.
Establish your emergency fund
Aim to put away three to six months of living expenses in cash for emergencies. Having a cash back-up is the best way to protect against unforeseen expenses. You never know what surprises will come up with a new baby. For many individuals, unexpected and uncovered medical costs arise or a parent cannot return to work as soon as expected. In the event of any sudden need for cash, an emergency fund will help keep you calm.
Get Insured
Now that you have a child, this is the time to get life insurance if you don’t have it already. For young parents, typically term life insurance is your best bet. This form of insurance will offer an affordable option with a set death benefit that is sufficient to cover your surviving family’s needs. When looking at life insurance, remember that the aim is for your family to maintain their quality of life as much as possible if you are no longer around.
Plan for college
For many parents, having a college fund for their new child is a priority. With a 529 account, you retain complete control of the fund. Additionally, a 529 Plan is always free of federal taxes and usually free of state taxes when used for higher education. One of the main reasons it is imperative that you plan for your child’s future is to avoid ever dipping into your own retirement savings.
Meet with your Estate Planner
A new baby changes everything. And one of the first thing that needs to change with the arrival of your child is your estate plan. Contact your estate planning attorney (or call us to speak with one of ours) to discuss or establish your living trust, will, powers of attorney and all other necessary documentation in the event of your passing. In order to protect the future of your child, you need to have plans in place for his or her care. Who will become the guardian of your child if you and your spouse die? When will your child inherit your assets? In a lump sum or in timed distributions? Planning for any outcome is the best way you can care for your child.
Embarking on the journey of parenthood is stressful enough without worrying about finances. And the way you handle money makes an enormous impact on a child and the relationship the child will have with his or her own financial future. While a baby is probably a bit too young to be taking notes on how you created your monthly budget, a parent’s stress level will undoubtedly have adverse effects on a child. With a little organization and preparedness in your financial planning, you can raise your child in an environment that is conducive to the health and happiness of your whole family.
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