Key Takeaways
- A lot changes when you have kids, including how you handle your money.
- There are some money tips that could be useful if you’re a new parent.
- Take some time to go through these to see if there are things you want to adjust.
Parenthood is a huge life transition that affects almost every aspect of how you live: your sleep quality (and quantity), your leisure time, your work habits, your relationships, and certainly your money management. If you’re a new parent, or about to become one, there’s a recent Forbes article with some good money advice just for you.
Starting with number one, get your child a social security number. This is pretty automatic these days for babies born in hospitals and is issued about two to three weeks after a child’s birth. For babies born outside of hospitals and for international adoptions, you may need to submit an application for your child with the Social Security Administration.
Number two, start a college fund. You’re likely aware that college is very expensive these days – it can cost anywhere from $50,000 to $250,000. There are a myriad of ways to start a fund, so make sure to look into your options and choose what works best for your family.
Number three, set aside emergency funds. Perhaps you already have an emergency fund, but as a new parent you’ll want to revisit how much you set aside. Considering that it costs up to $200,000 to raise a child to age 17, you might need a little more in your emergency fund.
Number four, review your beneficiary designations. You may have life insurance, a 401(k), or other things such as IRAs, where you have beneficiaries. Now that you have a child, you may want to adjust your beneficiary designations to add the child as a contingent beneficiary.
Number five is life insurance. If you have life insurance, it may not be enough now that you have a child. If something were to happen to one or both wage earners in a family, there will need to be sufficient life insurance for income replacement. As mentioned, it costs a lot to raise a child, so you’ll want to ensure you have enough coverage here.
Number six is to update your will or get a will if you don’t yet have one. With a will, you’ll be able to make your wishes known and specify who the child’s guardian(s) will be if both parents pass away.
Number seven is to look into child tax credits. You can either research these yourself or ask your accountant to help you with this, but either way, make sure to take advantage of the credits, as they’ll help a bit to offset all the inevitable expenses that come with having children.
Hopefully these tips will help alleviate some of the stress of parenthood so that you can focus more on all the wonderful aspects of having a new family member! Until next time, enjoy.
