There is no denying that starting a family will change everything about your life-your priorities, values, and finances. Especially since we live in a time when all bets are off since we’re dealing with a pandemic and a recession we didn’t see coming.Whether you’re engaged or expecting, here are some key pointers to help you get started on your financial journey with your new family.
Review your budget.
They say that having a child changes everything, which means that every area in our life needs to adjust to accommodate this new season of our lives. Because your life and priorities will change, your budget needs to change as well.
Go over your monthly expenses and check where you can afford to cut back. Some leisure expenses include dining out, streaming services, and other non-essential costs. Exhaust every area of your financial life to ensure that you’re saving up where you can, no matter how far along you are on your pregnancy.
The time to start on cash flow planning was yesterday.
Because expecting parents need to anticipate an increase in expenses, they need to check if their companies or employers can provide a dependent-care flexible spending account (DCFSA) to identify if they can be assisted with costs for dependent care.
An emergency fund is also of the utmost priority since you’re not just preparing for birth costs; you also never know when your baby will need healthcare and other medical costs. Financial experts typically recommendhaving between three to six months’ worth of money reserves on hand in places that are easily accessible to you, like a high-yield savings account or a checking account, especially if you have enough self-control not to spend it all down. Another option is to have these funds in a money market mutual fund. This emergency savings should exist to help cushion you and your partner if you lose a stream of income or other unforeseen events that might affect your ability to cover your basic day-to-day needs.Incorporate medical expenses in your financial planning as well.
Make your child’s education funds a priority.
It’s never too early to start thinking about your kid’s college funds, especially since studying college in the United States is expensive.And forget about going to university or college-you need to consider your kid’s primary education as well. If you want to send your kid to a private school, look up college savings calculators on the internet to help you get a picture of just how much you need o save. You will also benefit greatly from using tax-advantaged education saving tools such as college saving plans offered in different states. The 529 plan, for example, can provide state tax benefits.
Consult with your accountant or a tax specialist about the implications and benefits of your current tax situation.
Map out your real estate plans.
If you and your partner are also planning to buy a house and know that you are ready to do so,find the ideal loan types and payment options for your current financial capabilities. Don’t just settle for the first mortgage rates you see-employ the services of a real estate agent to help you find the best mortgage ratesin your area.
At the same time, think about the role that real estate will play in your financial life. Do you see yourself investing in real estate property, or do you want to look for a forever home? What purpose will this new house serve? Answer these questions first to help you understand what kind of residential property you should be investing in.
Prioritize your current debts.
If you have debts like personal and credit card loans, find ways to reduce these debts as much as possible and as much as you can before the baby comes, especially since giving birth might cause you to encounter more unexpected medical expenses along the way. Here are some tips:
- Consolidate all of your debts into one to help scale back your interest fees.
- Shop around to see if you can get more ideal offers regarding interest rates whenever you make big purchases.
- Review your current credit card situation to check if you’re getting advantageous deals when you factor in additional benefits or annual fees.
Having a new baby is one of the most, if not the most, exciting time for you and your partner. Be prudent about your finances, but always remember that money isn’t everything-so don’t let financial stresses rob you of joy during this exciting time of your life.