Bringing a new life into the world is one of the most amazing, awe-inspiring, and emotional things you can ever do in this human life. If you or your spouse has recently given birth and you have a brand new baby to look after and dot over, chances are your finances are the last thing on your mind, but you’re a parent now and you have a little one to look after, which means money really matters.
As a new parent, you will want to look closely at your finances so you can build a better, more secure future for yourself and your family and plan for any and all eventualities. With that in mind, below you will find a list of financial movies every new parent should probably make:
- Ensure your child is insured
One of the first things you are going to want to do is to ensure that your child is fully insured on your health insurance.
Many people do not add their infants to their health insurance policy because they forget or because they somehow think that the insurance provider will know that they’ve had a baby and add them to the policy automatically, but this is not the case.
Most health insurance plans will stipulate that you have between 30 and 60 days after the birth to add your child, so as long as you do it within this timeframe, they will be covered retroactively. But be sure to check your policy carefully to ensure that is the case, and the sooner you can add them to your policy, the better it will be for them and you. It’s always better to be safe than sorry.
- Update your will
If you do not already have a will, now that you have a child, it is important that you get one drawn up, If you do have one, you will need to update it to ensure that your child is well provided for should the worst happen and you and/or your spouse no longer be around to take care of them.
It’s never fun to think about this kind of thing when you have a brand new baby who you would do anything for and who you cannot imagine leaving, but we really do not know what is around the corner, and good estate planning will ensure they are well provided for no matter what. Of course, updating your last will and testament will also enable you to appoint a guardian for your child in the event that both parents pass away, so it is important for more than just financial reasons too.
- Get term life insurance
Buying term life insurance is also an important thing to do if you want to secure your new child’s future. You might think you have decades of life left in you, but again, you never know what is around the corner, and should something catastrophic happen, having term life insurance in place will mean that, if you pass on, your family will be awarded a large lump-sum which will hopefully be enough to settle your debts, pay off the mortgage and avoid leaving them in the lurch financially when they will already be devastated by your loss.
- Think about disability insurance too
If you work in a manual job or an occupation that comes with any risk of injury, it may also be a good idea to invest in a disability insurance policy too. This will protect you and your family if you are left severely injured or disabled and thus unable to work in the future.
This is something that many people think will not happen to them, but it can and does happen, and it can completely decimate a family’s finances for life. By having a disability policy in place, you will not only have peace of mind, but you will also be able to pay the bills and pay for care should you end up disabled, for enough time to give you some breathing space, at least.
- Max out your HSA contributions
Health savings accounts are often overlooked and underused in the USA, but they are an excellent pre-tax benefit that can really make a difference to your family and how able you are to pay for any future medical care.
Now that you are a parent, you should definitely consider maxing out your health savings accounts so that you have the money you need to pay for medical appointments, doctor’s fees, and even things like baby formula should you need it, all completely tax-free.
- Open up a savings account for your child
Many people do not realize that you can open up a wide range of savings accounts, college funds, and even pensions for babies. Doing so is a great way to give them the best start in life you possibly can. Even if you can only afford to put a few dollars away each week, that amount will grow significantly by the time they reach the age of 18 or 21, and then they can use that money for college expenses or their first car or a house deposit, or whatever will make the most positive difference to their life as a fully-fledged adult.
- Start budgeting
If you have never budgeted before, now that you have an extra mouth to feed, and all of the expenses that come with raising a child, it is a really good idea to sit down and draw up a household budget that will ensure that all of your costs are covered.
Many people think that living on a budget is a joyless way to live but when you know exactly what you have coming in and going out, it gives you more peace of mind that you can provide effectively for your child, and you can maximize your income to ensure that you can afford a few nice treats along the way too.
You are a parent now, and you need to be responsible. Having a budget in place will help you to do that.
- Start an emergency fund
Having an emergency fund in place is also a good way to give your family peace of mind and ensure that you have some financial breathing space should things go wrong, such as a job loss or expensive car repairs being required.
Ideally, you should aim to build an emergency fund that is equal to at least 6 months’ salary, but if you can build up a bigger pot than that, then that will be even better.
As a parent, what you are trying to do is to make your financial situation as stable as it can possibly be, and having a pot of savings there that you can dip into whenever times get tough is one of the best ways to do just that.
- Take your finances seriously
Last, but not least, it is worth mentioning that just making an effort to take your finances more seriously now that you have a child will make a whole lot of difference to how you see the world, how much money you spend, and what decisions you make about your money int eh future, Take it seriously because it really matters for your family’s future.
If you can make as many of these financial moves as possible, you will be doing everything in your power to financially secure your family’s and your child’s future. So, what are you waiting for?