Adding a new member to your family is a joyful experience, but it significantly impacts the household budget. From health insurance to college funds, consider these financial matters before your new baby joins the family.
Review Your Health Insurance
Before having a baby, look into the health plans you have available to see which policy best supports a growing family. Compare deductibles, co-payments and premiums, and take a close look at the maternity services provided. Factor in infertility treatments, prenatal visits and midwife services, plus potential coverage needs that may arise such as neonatal care for premature babies. Once you weigh the pros and cons, choose the policy that best supports the exciting step of growing a family.
Revisit Your Budget
Financial planning for a child’s future requires a commitment to staying on a budget and paying down debts. Household expenses will increase when you add children to the equation. Diapers, formula, baby furniture and clothing are just the beginning. Maybe your current vehicle is not the most practical for a growing family. Maybe your current residence isn’t, either. If you determine buying a new house makes the most sense for your family’s future, clear up any issues with your credit report and start tracking the housing inventory in your price range. If a new home does not fit in the budget, consider remodeling your existing home to create a safe, comfortable space to expand your new family. Be sure to include the cost of daycare, which for many American families is one of the largest household expenses each month.
Recalculate Your Income
Crunching numbers is important to get a snapshot of what the next few years might look like financially. Here are some important questions to ask:
- Will you continue to work once the baby arrives?
- How much maternity and paternity leave can you afford to take without incurring a financial setback?
- When you return to the workplace, will it be full-time at the same wage you earned before having your baby?
- Is your employer open to part-time or flexible work schedules to fit your growing family?
If the cost of childcare is prohibitive in your situation, one parent may decide to stay home. If that’s the case, try to live on just the one income for a few months to determine if that will meet your family’s needs. If that doesn’t work, consider how a parent staying home with children can continue their professional path in a different capacity, such as through free-lance or part-time work.
Reevaluate Your Financial Priorities
You should update your will to name a guardian for the child and make sure your assets are properly distributed. You should also consider life insurance to protect the family in the event of tragedy. The sooner you start a college fund the better, and don’t overlook your own retirement planning. By taking the reins of your family’s financial decision making, one day you can pass those good financial habits onto your kids.
If you are ready to expand your family, meet with a Farm Bureau financial advisor to discuss preparations like a 529 plan for your child’s college savings, life insurance policies to ensure your family is protected and an emergency fund to handle unexpected expenses.