Setting up the nursery, taking birthing classes, picking names, reading parenting books … there’s so much to do when you’re expecting. But don’t forget these important financial tasks as you prepare for the arrival of your little bundle of joy.
Evaluate life and disability insurance needs. A term policy is a cost-effective way to protect your growing family should the unthinkable happen. Life insurance can pay the mortgage, provide childcare, or send your son or daughter to college. This type of insurance can be a relatively affordable option, especially when you’re young and in good health. Disability insurance can help protect your income stream should you be injured and unable to work. Your NFP advisor can help you determine what you may already have through your employer and how much coverage would be appropriate in your particular situation.
Beef up your emergency fund. With more people depending on you, this is more critical than ever. It’s important to put aside at least three months’ worth of expenses in a highly liquid vehicle such as a high-yield FDIC insured online savings account. An emergency fund can prevent you from having to raid your 401(k) in the event of a medical crisis, expensive home or car repair or other unanticipated event.
Add your child to your health insurance plan. Lots of doctor appointments come with a new baby, and you’ll want those and as many unanticipated medical expenses as possible covered by your employee-sponsored health insurance plan. So stop by your benefits office to find out how to add a new child to your plan and see if there are any changes you may want to make in your coverage.
Update your will. Naming guardians for your child in the event of your death, while unpleasant to think about, is extremely important. You’ll also want to revise your will to reflect any inheritance you want to leave your newest family member. And don’t forget to assign beneficiaries to your retirement and other accounts — funds can always be held in trust until your child comes of age.
Set up a college fund. With the price of higher education growing year by year, it’s never too early to start saving for college. The time will come before you know it. Luckily, you have a number of tax-advantaged options to start putting aside money for this purpose. A number of states have prepaid college plans that will let you lock in tomorrow’s education at today’s prices. And 529 savings plans can now pay for K-12 public, private and religious school tuition in addition to college.
We know it’s a lot to think about, but if you get your financial ducks in a row, you’ll be giving your child and your entire family one of the greatest gifts possible — the gift of a more secure financial future. You can set up an appointment with your NFP financial advisor for a free consultation to review your financial wellness and help prepare you for all the financial changes that arrive with a new baby.
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Perhaps you’ve lost a job, faced an illness or have been delt a family crisis that emptied out your emergency fund. What are your next steps?
You’re eyeing center-hall colonials in your neighborhood and dreaming about the garden you want to plant in the backyard and all the holiday celebrations you’ll host. You’ve saved toward this goal and think you’re ready to pull the trigger. But the real question is: How much house can I afford?
Or is it?
Social Security’s financial cliff is coming closer into view. Experts project that the fund that pays for government retirement benefits through FICA taxes will be depleted within the next 15 years.
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