Preparing Financially for your First Child
saving and spending (Photo credit: 401(K) 2013)
Preparing your home for your first child can be a huge undertaking, and with all of the excitement it can be easy to put off some of the important decisions – especially those that involve money. When picking out names and imagining the future with your child, it is perfectly natural to feel like money should be the furthest thing from your mind.
But as with all other financial decisions or investments, an earlier start can make a huge difference. If you wait to think about these things until after the baby is born, pretty soon it will be after the first few months when you aren’t getting any sleep. And then after the next few months, it’ll hit you while you’re trying to rebalance your work and family lives. Before you know it, time has flown by and you’ve missed countless opportunities for savings, and even earnings, along the way.
The Baby Stuff
Very few new parents need to be warned that their living space will need some alteration before they bring the first baby home, but knowing how far to go and what is really necessary can be tricky. The months before your baby arrives will be filled with expensive temptations, but reaching out to other parents and visiting second-hand stores for hand-me-downs and used items can save hundreds of dollars. Focusing instead on purchases related to safety first will help ensure that you’re ready in the most important sense of the word.
There are some items that will simply be a large expense no matter what like car seats and cribs, but keep your costs within reason by speaking with experienced mothers you know. Also refer to resources like the National Highway Traffic Safety Administration and the Consumer Product Safety Commission to be sure that you’re getting the best and most affordable options for your family.
Preparing for the Worst
No one enjoys thinking about being struck by tragedy, but as parents it is your responsibility to protect your children from even the most unthinkable possibilities. Developing a living will and a custody plan for your children in the event of your death is unpleasant, but knowing that they’ll be cared for no matter what is absolutely worth it. While it may be troubling to consider, most experience a sense of relief and a peace of mind once these arrangements are mind.
General wisdom suggests that when making such a plan, it is important not to will the money to the same person who will be responsible for the children. It sounds counterintuitive, but it is important that there be more than one person looking out for your child. Even though you wouldn’t leave them in the custody of someone you don’t trust, having another adult who is responsible will protect your child from manipulation or neglect.
Building a Safety Net
Being well-insured is one of the most important ways that you can protect your family. Health insurance is incredibly important, but it is only the beginning. Life insurance is often overlooked by adults who are young and healthy, but unfortunately diseases and conditions associated with old age are far the only dangers we face. There are countless flexible options depending on your location and independent needs, such as life insurance for Australians with AAMI.
Creating a safety net in the case of unemployment is also a good idea, and even crucial depending on your household’s funds. Building up a savings account that is only touched in the event of emergencies and investing in income protection insurance are excellent steps in guaranteeing that you’ll be able to provide for your family − no matter what happens.
Planning for the Future
Saving for your child’s college education may be the most important investment in their future you can possibly make. With the climbing costs of education and the rapidly expanding interest rates on student loans, having something set aside will relieve the pressure on both of you. It may even allow your child to choose their school rather than having to settle for what they can afford. Whether you decide to invest in a savings account or create a diversified investments portfolio with your money, the future is less far away than you think and you won’t regret planning ahead.
Category: Family Finances, Financial Planning
