When preparing for an addition to your family, whether it’s your first child or third, things can get costly. In the past, you and your partner likely focused on securing a strong financial future for the two of you, but throwing kids into the mix changes life quite a bit. Here are some financial tips to ensure your planning process goes as smoothly as possible.
(1) Note Of Your Valuable Assets
There are plenty of ways to save money to make sure that your finances are suitable for raising your new baby without any added financial stress. First, ask yourself: Where can I capitalize on my own investments? Once you determine the answer to that question, use that money to save up for remodeling a bedroom into a nursery, purchasing newborn essentials, and putting some money away for the future.
If you are a homeowner, look into refinancing your home when the time is right to save money each month on your interest rates and payments. With a baby on the way, every bit you can save helps. If you are a pro-college family, whatever you can conserve can go towards your child’s college fund. Last but not least, make sure you are investing in worthwhile companies and saving up for retirement. It’s easy to become overwhelmed by preparing financially for a new baby, but remember that you still have your whole life ahead of you, too. Once your children are grown and have moved out, you’ll be closer to retirement than ever. You want to set yourself up for success after they grow up, as well.
(2) Adjust Your Budget
Adding a new family member is also the perfect time to reassess your budget. No matter if this will be your first or fifth child, your budget is sure to change. Get ahead of the game by taking a close look at where your money is currently going and then determine how to reallocate it to account for a new child. As you do this, consider setting money aside for parenting classes, mommy and me sessions, and other necessities like daycare if needed once paternity/maternity leave is over.
New to budgeting? That’s okay. Take the time you have left before the baby is born to learn the basics like, how many budget categories you should have. You don’t have to be an expert, and you certainly don’t want to stress yourself out about money prior to the birth of your child. However, you want to do as much as you can to establish a working budget that will benefit your family. For some quick help, you can download a budgeting app to your phone. Making use of a budgeting app will get you into the habit of organizing and managing your money.
(3) Start a Health Savings Account Early
A new baby means adding another person to you or your partner’s health insurance. However, health insurance does not cover everything. There are still out-of-pocket costs that add up. Your future self and family will thank you for having money set aside to cover future health expenses, ranging from copays to specialty visits. You can also use this money towards hospital costs associated with the baby’s birth and any care he or she might need afterwards. Furthermore, if you learn that your child has some sort of disability, you can rely on this HSA to cover out-of-pocket costs related to the disability, such as hearing aids or glasses.
You don’t need to pour thousands of dollars into this account. Instead, you just want to get in the habit of building up the account, as HSAs have many benefits, such as lowering your taxes. As you consider opening an HSA, there are a few things to keep in mind: you can only use money from this fund for health expenses and only high-deductible plans are eligible. If you learn that you are not eligible for HSA, a personal loan can help you with a hefty medical bill that may be a challenge to pay out-of-pocket.
Expanding your family can be exciting and stressful, depending on how you approach it. You can reduce some of that stress by implementing the three money tips above. Doing so will ensure that you and your future family are on the path to financial success now and forever.
Written by: Smart Strategies Staff