This week, another article about parenting in Laeti's Tribe.
Suzie Wilson gives us amazing tips about finances as new parents.
We don’t always realise all the things we can do to have a serene mind and ensure that the family will thrive over the years and challenges.
Keeping in mind the big picture to set up goals makes success easier...
This post was written by Suzie Wilson.
Suzie Wilson lives in San Francisco (USA), she’s an interior designer with more than 20 years of experience. While her goal always includes making homes look beautiful, her true focus is on fashioning them into serene, stress-free environments that inspire tranquility in all who enter.
Becoming a parent can change your life for the better, but having a child can quickly make running a household even more expensive! That’s why parents can’t put their finances on the backburner when their new baby arrives. Money management is a common source of stress and conflict for many couples, and when you welcome your new baby into the world, you’ll have to factor additional expenses into your budget.
When you have a new mouth to feed, you’ll need to develop a new approach to handling your family’s finances. Here are some tips on how to prioritize saving and plan ahead for your child’s future.
Build an Emergency Fund
New parents are often surprised at how frequently they have to deal with unexpected emergencies, like surprise visits to the doctor. You might be tempted to simply put these expenses on a credit card and pay it off later, but establishing an emergency fund is a more fiscally responsible solution. If you don’t already have a designated savings account to serve as your emergency fund, it’s time to open one and start contributing. Experts recommend figuring out how much you spend each month and then aiming to save up between three to six months of living expenses for your emergency fund.
Already have a small emergency fund? Now is a good time to start making larger contributions on a regular basis so that you’ll be prepared no matter what comes your family’s way.
Consider a Home Warranty
Home repairs, ranging from plumbing to electrical, can easily end up costing you a lot of money. And while you can put together an emergency fund to cover these situations, you can prepare yourself (and your household budget) by looking into a home warranty. These warranties can cover plumbing and electrical repairs, as well as HVAC and appliance repair. However, with any purchase, you need to do some research before signing any agreements. Look for home warranty reviews to ensure you’re getting a good deal from a company you can trust. This will help protect both your home and your personal finances.
Prepare Your Estate Plan
You just brought your new bundle of joy into the world — the last thing you want to think about is your own passing. However, considering your own mortality and what you would leave your child with in the event of your death is an essential part of financial planning as a parent. For example, you should definitely either write or update your will to decide what your child will inherit. When creating your will, take stock of your assets and their value, including how much your home is worth.
Furthermore, you should take out a term life insurance policy. Why is it so important for new parents to have term life insurance? It’s a guarantee that your child will have a safety net after you’re gone; for instance, life insurance can cover expenses like funeral costs and unpaid bills. It can even help cover lost income and college tuition.
Update Your Health Insurance
Quality healthcare can be expensive, so new parents need to ensure that their current health insurance policy will suit their family’s growing needs. Whether you have employer-sponsored insurance or purchase insurance through the individual marketplace, having a child counts as a qualifying life event, which means you can switch to a new policy if necessary.
According to Credit Karma, you should consider the costs of premiums, deductibles, and prescription drugs before enrolling in a particular plan. If you choose a high-deductible plan, you can also open a tax-advantaged Health Savings Account for your family’s medical expenses.
Start Saving for College
A college degree is still an asset, but there’s no denying that higher education comes with a hefty price tag. That’s why parents should start saving for their child’s future as soon as they are able. The best way to begin saving for those tuition fees is by opening a 529 savings account. The growth of your contributions will not be taxed, and the tax-free withdrawals can be used to cover your child’s educational expenses when they head off to college.
New parents are busy juggling so many responsibilities that it becomes easy to ignore financial planning. You might feel like you’re too exhausted to crunch numbers. However, if you sit down to evaluate your portfolio, find new ways to save, and ensure that your child will be financially stable even if you can no longer provide for them, you’ll be secure in the knowledge that you’re giving your child the best life possible.
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