Questions To Consider!
Considering having your first baby? Or maybe you’re already expecting a little bundle of joy?
Congratulations! You’re about to start on the journey of a lifetime!
But as with any adventure, it’s important to start out as prepared as possible. So for a new baby, that means reading the books, taking the classes, setting up the nursery, making sure your money is in order, and getting some top notch financial advice.
Let’s start with some advice from an expert – The following are the three top questions Dave Ramsey wants you to ask yourself before Baby arrives.
Once you learn about your new addition, all you’ll want to do is dream. What will it look like? Will it have your eyes and my smile? Will its hair be curly or straight? Will it have any hair at all? Will it be a boy or a girl?
Sooner than later, though, you’ll need to float down from your dreams and land on the ground long enough to face your financial reality. You can do this by asking three simple questions.
- Are we living on a budget? If you aren’t consistently telling your money what to do before the month begins, now is the perfect time to start. Dave says it takes about three months to get a handle on budgeting, so you’ve got plenty of time to practice. Trust us. You’ll want to make living on a budget a seamless process before sleepless nights set in. Check out EveryDollar, the new budget tool that syncs across devices making it easy for you and your spouse to know where you’re at with your money on the go.
- How will our take-home pay change once the baby is born? Will you both continue working? If so, will you need to pay for day care or will a relative be able to watch your little one for free? Will one of you stay home full time? Decide together what’s right for your family and do the math to see how your decision will impact your finances. Then, live like the changes are effective today.
- Where are we in the Baby Steps? Talk about where you’re at in the process and set a plan in motion for how you’ll continue with the Baby Steps despite possible changes to your income.
If you’re paying off debt, we’ve got a crazy suggestion for you: stop. Continue to make the minimum payments on your debt and save all extra money for potential emergencies throughout pregnancy or at birth. As soon as baby and mom are declared healthy, you can pay off a big chunk of your debt and move forward with your plan.
– via daveramsey.com
A Quick Checklist
Wondering when to do what? We can help! Here are a few key pieces of financial advice that all new parents need to take, starting at pre-delivery, when you’re still sleeping full nights and getting all your ducks in a row.
Then a few tasks for after the first month. By this time you’re home from the hospital and getting into a brand new, excited routine. After the first month is when you really start looking toward, and planning for, the future.
Understand your health insurance and anticipate costs. Having a baby is expensive, even when you have health insurance. You should forecast your expected costs fairly early in the pregnancy. NerdWallet’s guide to making sense of your medical bills can help as you navigate prenatal care, labor and delivery, and the bills that will ultimately follow.
Plan for maternity/paternity leave. How much time you and your partner (if you have one) get off work and whether you’re paid during that period can significantly impact your household finances in the coming year. Understand your company’s policies and your state’s laws to get an accurate picture of how your maternity leave will affect your bottom line.
Choose a pediatrician within your insurance network. Your baby’s first doctor appointment will come within her first week of life, so you’ll want to have a physician picked out. Talk to friends and family to get recommendations, call around to local clinics and ask to interview a pediatrician before you make your choice. In searching for the right doctor, don’t forget to double-check that he or she is within your insurance network. Ask the clinic, but verify by calling your insurance company so you’re not hit with unexpected out-of-network charges.
Start or check your emergency fund. If you don’t already have a “rainy day fund,” now’s the time to anticipate some emergencies. Kids are accident prone, and with the cost of raising a child there’s no telling if you’ll have the disposable income to pay for any unexpected expenses. Having at least three to six months’ worth of living expenses covered is a great place to start.
Beyond the first month
You’ll be in this parenting role for years to come, so planning for the future is crucial. Estate planning is a big part of providing for your children, but it isn’t the only important forward-focused task to check off your list.
Adjust your beneficiaries. Assuming you already have life insurance for yourself or the main breadwinner in your household — and if you don’t, you should — you may want to add your child as a beneficiary. The same goes for your 401(k) and IRAs. However, keep in mind that you’ll need to make adjustments elsewhere to ensure when and how your child will have access to the money. A will and/or trust can accomplish this.
Disability insurance. You’re far more likely to need disability insurance than life insurance. Make sure you have the right amount of coverage — enough to meet your expenses if you’re out of work for several months. Remember, your monthly living expenses have gone up since the new addition.
Write or adjust your will. Tragic things happen and you want to ensure your child is taken care of in the event that one or both parents die. Designate a guardian so the courts don’t have to. Your will is only one part of estate planning, but it’s a good place to begin.
Keep funding your retirement. When a child arrives, it’s easy to forget your personal goals and long-term plans in light of this huge responsibility. Stay on top of your retirement plans so your child doesn’t have to support you in old age.
Save for his or her education. College is costly, but you can make it more manageable by starting to save early.
– via NerdWallet
Are you ready for the adventure of parenthood?