The last thing expectant spouses expect while anticipating the birth of their child is planning that goes beyond the décor of the nursery. However, taking proactive steps can help lessen the impact of increased expenses and plan for a financially secure future.
No Crying Over Cost Controls
Eventually, the influx of baby shower gifts will end. However, buying diapers and other essentials is only the beginning of the additional expenditures. During the first two years of a child’s life, parents spend approximately $12,600 more annually, according to USDA’s Expenditures on Children by Families report. Anticipating financial increases while getting a handle on spending before the birth are important.
Bringing Up Baby With A Budget
With an impending birth comes the promise of not only immediate expenses, but also long-term costs. Future financial security can remain in reach. Avoiding budget busting requires reprioritizing savings versus debt reduction. While the focus is on the immediate impact, that natural “tunnel vision” should not stop long-term financial planning for college and retirement.
The Childcare Conundrum
Part of immediate financial planning must account for childcare expenses. With daycare close to $1,000 dollars a month with in-home services doubling that amount, one parent staying home may be an easy financial choice to make. However, ending a promising career can go beyond a budgetary impact. Friends and family members who made that choice are a vital resource to advise new parents.
The Circle Of Life
Expectant parents who do not have enough, or any life insurance must consider the child’s well-being in the event of a tragedy. While uncomfortable to think about, the children about to start their lives are entitled to security beyond the lives of their parents. College tuition, debt retirement and potential lost wages could require a policy of $500,000 to $1 million. Coverage should also include the stay-at-home parent.
Ensuring A Child’s Security Beyond A Blanket
At their stages in life, most young parents have not considered estate planning. Many are early in their marriages and have not built up significant savings and assets. Regardless, a will and trust can go a long way to secure a child’s future. Planning must also involve selecting a guardian who will care for the child. Know that nothing is set in stone and can be adjusted as life changes.