X is for eXpecting Parents and the Necessary Financial Steps

X is for eXpecting Parents and the Necessary Financial Steps

Being an eXpecting parent can be an exciting time. There is a lot to get ready for with the arrival of a new baby. And often, that means taking a hard look at your finances. Taking care of an entirely new human being can strain finances or change how things had been before. However, taking a few necessary financial steps can mean having a better financial future for yourself and your child.

Even if this is your first child or your fifth, the financial changes that need to be made can be challenging. This is a life-changing event. And you should plan accordingly for it. Here are some necessary financial steps to take when you are an expecting parent:

Adjust your Health Insurance Accordingly

Although it seems as if your new baby should just appear on your health insurance plan, this is not typically the case. Luckily, having a baby is a life-qualifying event where you can enroll your new baby at any time during the year. While you are registering your baby, it is also a good idea to look at your Health Savings Account. Adjust your HSA accordingly to include more money to cover the baby’s expenses as they will now be going to the doctor frequently and potentially needing care or medication.

Create a New Budget

With the addition of a new person comes the need for a new budget. Extra expenses like child care, doctor appointments, and purchases like car seats and strollers are going to add to your existing budget. Then factoring in more recurring additions such as food, school, and toys can add up quickly. Therefore, it is essential to adjust your budget as soon as possible to save up for larger purchases and get used to your new budget.

Update Your Taxes

Again, your child is not immediately added to your tax bracket. But claiming your child on your taxes can result in significant savings and tax cuts when tax season rolls around. 

Create a Will

Now that you have a dependent, it is vital to plan ahead in the case of your untimely death. While it may seem like a joyous time you wouldn’t want to muddy, thinking about the future is important when others rely on you. Update or create a will or trust to make sure your child is taken care of. Update or consider getting life insurance as well for an extra layer of protection.

Start Saving!

Perhaps you should be (or already are) doing this, but saving is so important! Again, now that you have a child depending on you, it is necessary to make sure they are taken care of if something were to happen. Creating a savings account for their college tuition is a good start. And making sure that your emergency fund includes taking care of a new child along with all of your other expenses. Start saving for your retirement now, so that burden doesn’t fall on the new child later.

While it seems as if there is a lot to change and to think about when a new child arrives, expecting parents can rest assured if they follow these financial steps before their new baby. And enjoy this new and exciting life moment instead of worrying about finances and what the future will hold.

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