How to Financially Prepare for Your First Child
Becoming pregnant with your first child is an exciting and major life change. Although some of this will come naturally, it’s important to adjust your current lifestyle to fit one more geared toward being a responsible parent. One of the most imperative things to revisit not only during your pregnancy, but throughout parenthood, is your financial plan. Luckily adjusting your finances to incorporate the needs of your new little bundle of joy isn’t as difficult as it may seem with proper planning. Follow these tips to make sure that you are financially prepared to bring your first child into the world.
Review Your Insurance Policies
As an expectant parent, take time to review your r current insurance policies. Since your newborn will be added to your current health insurance plan, it’s the perfect time to make sure that your health insurance has great coverage for needs, like vision and dental. Another policy that you should either purchase or update is your life insurance. Having a child can alter your policy, since you may consider adding your baby as a beneficiary. The younger your child is when you purchase a life insurance policy, the less it will cost.
Create a New Budget
Developing a family budget is the next step to ensure financial stability while expecting. Start by saving money for those “what if” moments that come along with having a new baby. Creating a new budgeting plan is the best way to make sure that you can have an emergency fund as well as live comfortably.
Creating a budget can be pretty easy; it's recommended that you follow the budgeting basics that are associated with buying a new home or finding a more family friendly vehicle for example. These rules are simple and easy to follow, especially if you use a method like the 50/30/20 rule. This means that 50% of your monthly income should be spent on living expenses, 30% should be spent on entertainment or wants and 20% should be deposited into a savings account.
Another way you can save additional money and contribute to a structured family budget is through looking into your bank account and other financial services that help you stay organized with saving, spending, and maintaining a consistent money management plan. While an Excel spreadsheet or budgeting journals can be valuable options, the more tech savvy side includes a fee-free financial services or budgeting app that’s downloadable on your smartphone too. Technology is changing the way we organize our lives each and everyday, and as a new parent, utilizing a platform capable of controlling your finances right from the comfort of your own home can completely get rid of your need to go to an in-person bank to manage your account.
Give Your Child Their Own Bank Account
Another thing to consider while you are expecting is giving your child their own bank account. A separate bank account is a great way to set them up for future financial success. This is vital within the last few weeks of your pregnancy, as many family members and friends may start gifting you money for your new baby. By setting up a savings account for your newborn, you can then choose to start depositing money for each of your child’s life events as they grow up, like birthdays, graduations and even funds related to their time in college. The earlier you start to save, the more helpful it will be for them as they navigate life as a young adult, and when they are ready to be more independent.During the exciting time of preparing to become a new parent, it’s important that you make the correct financial decisions for you and your family. It’s never too early to start thinking about your child’s financial future, and the sooner you start saving money, the more comfortable and secure you and your family will be.