SHANNON VINNICK
Sales Associate/REALTOR®
Realty Executives Oceanside
Several changes may be necessary after having a baby. Among the many challenges parents face are sleep deprivation and changing soiled diapers. You also need to consider your finances, even though you're probably not getting much sleep at the moment.
After bringing a new baby home, parents should prioritize the following five financial decisions:
Update Your Budget
Having a child may be pricey, particularly during the first year when you're faced with unfamiliar expenses. The things you'll need to buy are clothes, toys, car seats, diapers, formula, cribs, changing stations, and cribs. In addition, daycare might be required if both parents work full-time. Some families would require greater long-term financial planning in order to afford a larger vehicle or home.
If needed, make changes to your family's budget and look for ways to save money. Check with your employer about opening a health savings account so you may utilize pre-tax dollars to contribute to an account for your family's medical expenses, as medical bills will probably increase.
Put aside money for college.
You can help pay for college by setting up a 529 college savings plan. When contributions are taken out to cover eligible educational costs like tuition, they do not incur taxes. Contributions grow tax-free. Contributions to 529 plans are eligible for a full or partial tax deduction or credit in more than 30 states.
As of 2018, contributions made by parents and grandparents are exempt from gift or estate taxes up to a total of $15,000 per kid. In a 529 plan, four grandparents' contributions may total $60,000.
Adjust Your Life Insurance Policy
Talking with your life insurance agent should follow any significant changes in your life. Should a parent pass away, you might be left to support and care for your child on your own. However, insurance might offer funds to cover childcare expenses or a loss of income. Additionally, you should inform your beneficiaries in case something were to happen to you.
Revise Your Will
When you have a new baby, you'll need to update your estate plan documentation, just like you would with life insurance. Updated wills and trusts should specify who will be in charge of your assets and name a guardian for minor children. If there's no update, a judge might name a guardian for you.
Update any beneficiary designations that aren't specified in a will on your 401(k) and other retirement plans, as well as any other bank accounts.
Arrange Your Documents
Generate hard copies of important documents, including the immunization record, Social Security card, and birth certificate. Get three copies of your child's birth certificate so that when the time comes, both of you and your child will have one.
Vaccination records should be kept on file, as they will be required if your child attends daycare. Seal everything within a fire-resistant safe.
(This material should not be interpreted as professional or legal advice; rather, it is meant purely for informational purposes.)
