Having a child is considered one of the great moments in a person’s life. However, while new parents spend most of their time making sure that their child’s needs are met during the first few months of parenting, they’ll have to evaluate their finances at some point. To help new parents during the evaluation process, here are some important financial tips to consider.
Look at your documents
Make sure that you have copies of your child’s Social Security Card, birth certificate, and immunization record. Consider ordering multiple copies of your child’s birth certificate. Keep all of the documents stored in a safe place. Keep track of any pre- and post-delivery medical bills to make sure that you don’t overpay for any treatments. Many parents are mandated to prepay for some providers, so check to see if you will be reimbursed if you meet your deductible. Contact your insurance company if any questions arise.
Start a college savings account
Set up a college savings plan so that there will be money set aside when your child is ready for college. Some of the funds can be invested and avoid taxation when they are withdrawn to pay for educational expenses, such as tuition. Some college savings accounts allow both sets of grandparents to make a financial contribution.
Adjust your insurance policies
The hospital where your child was born at should give you a Confirmation Of Birth document that you can give to your insurance company. You’ll likely have a month to add your child to your medical insurance coverage. Talk to your insurance agent to either update your current policy or create a new one. Make sure that your policy covers both you and your spouse, so that you’ll be covered regardless of any situation that may arise. Try to schedule any medical procedures during the deductible year. There is a good chance that you’ll meet your deductible because of the necessary costs associated with a newborn baby.
Evaluate your estate
Make sure that you update your estate plan documents, such as your will. In the event of an unforeseen circumstance happening, make sure that you have a guardian in place that will be in charge of managing the assets that are left behind. Look at your beneficiary designation forms, just in case you need to update them. The beneficiary form determines where the funds end up going.
Adjust your budget
Having a child will result in increased expenditures. You’ll have to adjust your budget to deal with expenses such as baby food and diapers. If both you and your spouse work full time, then you’ll eventually have to deal with day care or nanny expenses.