Life is unpredictable — it doesn’t take becoming a parent to know that. However, becoming a parent does take planning in order to handle all of the changes that come with life. When you take on the role of starting a family, life indeed does change, and it happens fast. In order to deal with all that will come your way, it’s best to have the proper financial plan set in place. As a parent, you want to spend more time enjoying your family and less time worrying about financial woes. Here are a few tips to guide you along the path of parenthood.
Communication is key
Now, more than ever is the time to communicate with your partner on the roles you will play in your child’s life. Will one of you continue to work while the other stays home to care for the baby? How will having one form of income affect your household? Do you two share the same morals and values that you will pass down to the child? This is the time to express how you both will step into your new role of being providers. Parenting will force both of you to see each other in a new light, so it’s best to communicate to iron out any potential differences in opinion.
Obtain a life insurance policy or make changes to an existing one
Life insurance is a financial safety net, should something happen to you or your spouse. Having a policy (not to mention an estate plan) ensures that there will be no financial burden left behind for your family. If you have an existing policy, now is the time you would want to add the child as a beneficiary. If you are not familiar with life insurance and the different plans available to you, arrange for a meeting with an insurance agent so they can make you aware of your options. More than likely they will offer you either a term life insurance policy or a whole life policy.
Save for a home
Your current home may suit you just fine for now, but as your family expands you may find that you need to start seriously considering buying a new home. Saving for a house doesn’t have to break the bank, and like family planning, it is a process. Start by creating a monthly budget, and set up a bank account that is dedicated solely to your housing fund. You will still have your regular checking account, but this special savings account is off-limits no matter what. Once you’ve saved enough money to adequately cover a down payment, start your search in a safe neighborhood. Family planning requires planning for the future, and it is important that you take your family’s safety and well-being into account when finding the perfect home.
Plan for college
College is a quite hefty expense to bear, so in knowing this, it’s best to have a plan in line now. Many parents set the expectation for their child to go to college, so investing in a 529 plan will secure the financial ground that higher learning provides. Student loan debt numbers are at an astronomical amount, and many students graduate college with no idea as to how they are going to pay off their loan. Have peace of mind that when the time comes, your child will be free of that burden of financial insecurity by implementing a 529 plan as soon as possible.
Plan for your retirement
One thing a lot of new parents forget to do upon the birth of their child is to continue to take care of their own future. Having a retirement savings plan in place gives you comfort and security in knowing that in old age, you will have the financial means to continue to sustain yourself without working. Retirement savings could be used to move out of the family home and downsize to a more accessible home to maximize safety and reduce expenses or set up a college fund for your grandchildren to help your children with their own financial planning. A retirement plan also guarantees that when you grow older, your child won’t have to face the financial burden of taking care of you.
Becoming a parent is truly a magical, joyous occasion — if you plan it correctly. A lot of household problems arise from money concerns, so it’s best to make sure your finances are strong and headed in the right direction to make the load a bit lighter for you and your family. As it has been said, children grow up fast —making sure your finances are in order will allow you to be fully present in those precious moments with them.