Financially Preparing for Parenthood

With the excitement of being a parent also brings with it some very unique financial challenges. After all, raising a child can come with a big price tag. According to the U.S. Department of Agriculture, a middle-income couple can expect to spend an average of $233,610 from birth to the age of 17. The more financial decisions you work out ahead of time, the more you’ll enjoy parenthood and reduce the stress of the added expenses. Here are few important considerations as you plan for the big day.

Get a Handle of Your Budget

Understand where your dollars are going, eliminate unneeded expenses and make adjustments where needed. Prioritization is key so you’re spending money on what’s most important and avoiding the unnecessary expenditures. Having a baby changes both your life and your budget. This is the time to begin thinking of your immediate expenses (diapers, baby food, etc.) as well as the large one-time expenses and impacts (the hospital bill, maternity and paternity leave, baby items, etc.)

Start Saving

Unplanned expenses are going to occur. There’s no avoiding it. Now is the time to set some savings aside for the emergencies and must need unplanned purchases. It’s also time to open a savings account for your child as well as a tax-advantaged 529 college savings plan. List yourself as the beneficiary and change it to your child after he or she is born. It’s never too early to save, especially when preparing for the birth of your child.

Make Sure You Have Health Insurance and It’s Up to Date

Check your health insurance plan before the big day to ensure that there are no surprise expenses related to the birth and any hospital newborn care. Understand the costs and how much you’ll need to pay upfront. Health insurance companies typically require that your baby be added to a policy within 30 days of birth, and your insurance company should provide retroactive coverage to the date of birth. However, it’s a good idea to check into this before the baby arrives … and while you have a bit more extra time.

Purchase Life Insurance Policy and Create a Will

While it’s not likely to be top of mind, purchasing a life insurance policy will provide peace of mind in the unfortunate instance of your passing. If you already have a life insurance policy, it’s important you considering adding your new child. You should also add you child as a beneficiary to your existing policy. It’s also important to name a guardian for your child/children and prepare financial arrangements if you’re no longer around. While a lawyer is not required to write a will, it’s recommended you consult a lawyer to cover all your estate planning needs.

Consult Your KIG Advisor

The KIG team would welcome the opportunity to help as you prepare for this exciting new chapter of your life. Contact us today to learn how we can help with both your short and long term planning needs.

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