Having a new baby is always exciting, but the excitement is always followed by some anxiety about finances because babies make you realize just how much money you need to take care of them.
Financial advice for first-time parents is not just about diapers and baby clothes. The key to ensuring that you do not get stressed is to have a solid financial plan.
Put your priorities in order, and always deal with what’s important first. In the first couple of months, you want to ensure that your baby is healthy and happy, but in the next few years, your child will start school, continue reading to learn more.
Between the many diaper runs, and visits to the pediatrician, your expenses will slowly start to pile up. It is important to take a step back and come up with a budget.
This will bring everything into perspective and you will be able to see how much you are spending, how much you have left in the bank, and how much you need over the next couple of months. Stick to this budget no matter what happens.
Come Up With a Rainy Day Fund
Now that you have a newborn baby, the prospect of losing your job or falling ill can be pretty scary. You do not want to lose your child or your spouse.
It is wise to have an emergency fund, because the truth is that emergencies can happen. The most standard way to do this is by hatching a savings plan that will cover at least 3-6 months of expenses in case anything were to happen to you.
Unfortunately, this is an area where people can fail. If you are a new parent, you cannot afford to fail, so, you must have some money put aside.
Have a Close Look at Your Health Insurance
Once you have a baby, you spend more on medical bills than anything else. It’s not just about the delivery and labor, but you must also consider things, such as emergency room visits, which tend to be a little bit more, and the medications that kids need.
Run all of these thoughts with your insurer and see what they say about your current plan. If there are any incidents not covered, you might want to re-think your coverage.
Put a Will Together
Writing wills is a hard topic to think about, let alone do, but it is vital to have a will in place once you become a parent. This is not just about helping your family, but it also avoids disputes about your possessions if you happen to pass away.
A will gives you the authority to designate a guardian for your child if something were to happen to you or your partner.
Don’t Make Yourself Poor
If you have a new baby, you may start to think about the beautiful house you always imagined raising a family in. This is quite normal. We all want the best for our families, but let it not be at the expense of your finances.
If buying a bigger house means straining your budget, then it’s probably not a good idea. A general rule is that you must always keep house payments at below 30% of the income you bring in. This avoids budget woes and ensures that you are able to live a comfortable life.
Start a College Fund
People are now starting college funds for their children. This is because college is probably one of the most expensive things you may have to pay for your child.
Public universities and colleges have high tuition fees, that range between $9,000 and $23,000 per year. The earlier you start working on this fund, the better.
State-sponsored 529 plans are the best for college savings and students can make tax-free withdrawals for their tuition and other expenses they may incur while in school.
These tips are for any first-time parent who may be struggling with finances. Budgeting, saving, and planning are very important things to do to prepare your finances.