As a new or expecting parent, there are a number of expenses you need to prepare for. Raising a child isn’t cheap, and it only becomes more expensive as time goes on. If you want to be sure that you’re prepared for many of the major financial obligations associated with raising a child, this financial checklist will help confirm that you have everything in order.
Step One: Plan for Hospital and Delivery Costs
The average cost of birth in the United States is more than $30,000, without even factoring in the costs of prenatal care and checkups in the months leading up to it. Much of this amount will be alleviated by insurance, but you’ll need to consult with your provider to fully understand the amount you’ll owe following delivery. You will also want to make sure your doctor, hospital, and anesthesiologist are all in network with your insurance, prior to your delivery. By planning for these expenses, you can stay one-step ahead and take at least one worry off your plate when your child arrives.
Step Two: Build Up Your Emergency Fund
You may already have an emergency fund set up, but the amount you save up will change when you have a child. Ideally, you want to have 3-6 months of required expenses including rent or mortgage payments, car and insurance payments, groceries, and more in your emergency savings fund. The goal is that in the event of a job loss, you will have enough to be able to take care of your family while you search for a new job. Your emergency fund will also help cover things like emergency child care, hospitalization for illness or injury, or unexpected home repairs.
Step Three: Examine Your Will
Have you been putting off writing your will? Now is the time to write one or update an existing one. Make sure you’ve designated the individual that you and your spouse would like to raise your child or children in case something happens to you as well as how your assets should be handled. Do you want to create a trust for your children to access when they’re older? Do you prefer to hand over control of your assets to your child’s guardian? Make sure that your estate planning documents leaves your family with everything they will need.
Step Four: Update Your Insurance
Aside from adding your child to your health insurance plan, this will also be a good time to review your life and disability policies. As your family grows, it is more important than ever to make sure that your insurance plans are adequate to provide for the needs of your family in case of death or a disability.
Step Five: Revise Your Budget
Your budget is going to change significantly with the arrival of your child and some of your discretionary income may decrease. Make sure that you’re prepared for the changes to your budget, including:
- The cost of items the baby will need (clothing, crib, diapers, etc.)
- The cost of formula or baby food
- Child care expenses
- Medical expenses
Step Six: Start a College Fund
Many parents want to give their children the best possible start in life and that includes helping them pay for college. By opening a 529 or other college fund for your child, you can help make it possible without having to worry as much about budget constraints or taking out loans.
Getting your finances in line is an important part of preparing for a new addition to your family. By following these important steps, you’ll put yourself in a better place to deal with the new financial challenges that might be coming your way and set yourself up for better ultimate financial success on this new parenting journey. If you would like to speak to a CERTIFIED FINANCIAL PLANNER™ to learn more or for help setting up a financial plan for your family, please give us a call at 303-639-5100.