First comes love, then comes marriage, then comes a baby with…financial baggage? There are a lot of worries you experience when it comes to bringing a new addition to your life. And your new pint-size bundle can turn your financial world upside down if you’re not prepared. We know that you want to do everything in your power to give your child every advantage to succeed as they grow up. While you can’t control what the world can throw you or your child’s way, you can prepare financially. Here are four financial tips for first-time parents to help you.
Increase Your Emergency Fund
Life is already bound to throw unexpected things your way, and kids bring even more unpredictability. Give yourself peace of mind by creating an emergency fund with at least three to six months of living expenses saved. Be sure to protect that fund and only use it for true emergencies such as a medical crisis or paying expenses in the event of a job loss.
Update Your Life Insurance
Like we mentioned before, life can throw curveballs, so it’s best we prepare for them. Update your life and medical insurance plans to include your child. You have 31 days to add your new child to your medical insurance coverage, and should be made a priority. If anything medically were to happen, your family will be covered.
Revise Your Budget
It’s no surprise that your expenses will increase with the new baby, but many fail to realize just how significantly. How expensive? The average cost of diapers is around $25 for 120 count, and you can easily go through a box of diapers in less than two weeks. That’s enough to surely tilt your current budget. To prepare, we recommend increasing your budget by 10% for the first year to account for all of the large, one-time items (cribs, car seats, strollers, etc.)
Plan For Retirement
It might seem strange to think about retirement when you’ve just brought a new life into this world. You can’t retire the new mommy and daddy roles, but you’ll eventually want to start planning your financial future in order to retire comfortably. Part of preparing your child for financial success is not burdening them with taking care of you. Luckily, you can start saving now to prevent your child from digging into their pockets to help out.
As a first-time parent, you want to focus on your new bundle of joy as much as possible. And with these financial tips, you can do so without the worries of your financial situation. Your finances and your life will never be the same, and it can be overwhelming. If you need help getting started, our Member Advisors can help you create a plan that works for you and your new family. Come into one of our branches today.