A Step-By-Step Financial Plan for New Parents
Parents need to start financial planning as early as possible. Whether you’re a new parent, have a child in elementary or middle school, or already in the final years before your child leaves for college, it’s time to get your finances in order.
Financial Planning for New Parents
If you are expecting a child or have a newborn, you may be focused on your baby’s basic needs right now and getting enough sleep. But, there are some other pressing financial planning concerns to include in your good parenting 101 list.
- Health insurance. You’ll need complete coverage for both doctor visits and emergencies. As your child grows, you’ll also need dental coverage and possibly vision insurance.
- Life insurance. Learn about the different types including somewhere cash can be borrowed or withdrawn for any reason from Good Financial Cents.
- Child Guardian. Even if you do not have a lot of money or property a will is critical because it includes choosing a guardian to care for your child in case of death. Read the Consumer Reports guide to creating a will for your family.
Adjust your basic budget if you already have one or create one. A 2015 USDA report “Expenditures on Children by Families” found that most parents spend about $12,600 per year during the first two years of a child’s life. Formula, clothes, and baby toys all add up – not to mention childcare and those expenses will simply increase as your child grows. Parents.com has a helpful nine-month plan to get your finances in order.
Daycare Through High School
As mentioned, your budget is going to grow along with your children. In addition to your child’s increasing needs for clothes and food, school comes with fees of its own. Sports programs, music lessons, tutoring, and other activities may skyrocket the costs for your child.
Daycare and preschool may be your first taste of what paying tuition feels like. According to Care.com, there are several tax credits and subsidies that may be available to you to help pay those fees. Outside of your nine-to-five schedule, you may also need to account for babysitting costs. Adults-only time can be a healthy way to charge your batteries and be fully present to parent.
Are you planning to send your child to private school? If you think that private school is out of your reach, be sure to do your research. Censai has published some options that are available if you are low on funds and many private schools offer scholarships.
Preparing for College
It’s never too soon to start planning for your child’s college education. All 50 states have some sort of 529 plan, which is a tax-advantaged savings plan designed to encourage saving for future education costs. Learn the ins and outs of pre-paid tuition plans in this article from the U.S. Securities and Exchange Commission.
You may also want to consider having your child attend a community college for two years before transferring to a full university. The key is to make sure they are not saddled with excessive financial debt from student loans once they graduate. Learn more steps you can take to help save for your child’s secondary education.
Planning for Retirement
While your child’s needs are paramount, you need to plan for your own future as well. If your retirement account looks a bit thin, it’s time to make changes. The Penny Hoarder states that almost 50 percent of American families have nothing saved for the future. Part of creating your account means saying “no” to some of the things your kids want. Making smart choices while they are young can help build a fund for all your futures.
Besides increasing your odds of retirement savings and funds for college, there are other benefits to improving your finances. Staying on top of your finances can improve your physical and emotional health and raise your overall happiness. And that is a gift that benefits your whole family.
Being a parent is stressful enough without having to worry about your finances. However, with some careful planning, you can ensure that you and your family are set up for years to come.