Financial Checklist for New or Expecting Parents
Expecting a new addition to your family? Congratulations!
While you may be preparing with guidebooks like “What to Expect When You’re Expecting,” there are also some key financial considerations to check in on as your family expands.
Our top items are listed below.
8 Financial Considerations for Review:
Write or update your will – If you haven’t done so already, you will want to work with an attorney to create a will. If you have an existing will, you’ll need to name a personal guardian for your child.
Create a “baby budget” – According to the US Department of Agriculture, the average cost of raising a child born in 2013 to the age of 18 for a middle-income family is roughly $304,000 (when adjusted for inflation). Having a baby involves a lot of financial preparation; consider creating a baby budget to help keep your expenses on track. Babycenter.com offers a calculator that can help you estimate your first-year baby expenses and ongoing costs.
Add your child to your health insurance – Most insurance providers allow you 30 days from your child’s birth date to add them to an existing policy. Some employer-based plans will allow you 60 days, but better to make the change sooner rather than later so you do not risk the loss of certain benefits.
Consider life insurance – We always encourage new parents to consider life insurance to ensure that your child can be financially secure in the event that a parent dies. The type of policy and coverage amount will vary depending on your total household income, expenses, debts owed and long term financial goals (i.e. college savings or retirement savings). Take your time and do your homework when comparing policy types and rates. There are several online tools and calculators available to help you when shopping around for coverage.
Start or check your emergency fund – You’ll want to be sure you have an adequate amount put away as a “rainy day fund”. You can only plan on so much when it comes to children and you want to be ready for those unexpected expenses. We typically suggest having at least three months of living expenses put aside in the event of an emergency or to cover you if maternity leave is limited.
Update beneficiaries – There are several different life events that can trigger a need for a beneficiary update. After the arrival of a newborn, you should add your child as a contingent beneficiary for your life insurance policies, annuities, and retirement accounts (IRA’s, 401(k), etc). Keep in mind that beneficiary forms take precedence over wills and trusts. The individual you name as your beneficiary will be the one to inherit your assets regardless of any other legal documents.
Consolidate important documents – You will have enough to worry about after arriving home from the hospital, do yourself a favor and get yourself organized! Consolidate contact information of doctors, accountants, lawyers, advisors, etc. You also might want to review your financial accounts and note where you have filed other important documents such as property deeds and car titles.
College planning – It is no secret that funding a college education is costly, but it can be more manageable if you start early. One of the more popular savings vehicles is the 529 plan. Parents or grandparents can set them up or contribute to them as gifts, a wonderful baby present! We have done extensive research on the top rated 529 plans – let us help you evaluate your circumstance and help you in selecting a 529 plan.
As you can see, there are a number of financial and non-financial points to consider when your family is expanding. This checklist is meant to be a helpful guide on things to update and get organized on as you await your new arrival!
