By Matthew Gaude & Shawn McGuire
Having a baby is exciting—the miracle of life. But it can also be stressful. After all, kids aren’t cheap. And if you’re like most new parents, you’re probably wondering how your newborn will affect your finances. What can you expect? What needs to change? And how can you make sure you’re prepared?
Fortunately, by following a few financial steps, you can make sure you have all your bases covered (and put your mind at rest).
These steps are best done before your baby is born. If the little one is already here, it’s time to play catch-up!
Let’s dive in.
Create A Budget
If you don’t already follow a budget, now would be a good time to start.
If your baby is already here, you probably have already been hit with some unexpected expenses (prenatal care, checkups, vitamins, maternity clothes, delivery expenses, etc.).
Being a parent is challenging enough as it is; add in unplanned expenses to the mix, and you’ve got a recipe for stress.
Fortunately, you can create a budget that minimizes these unplanned expenses and make life much easier.
When putting together your budget, make sure not to forget about your retirement plan. It’s easy to get so focused on childcare costs that you forget to put money away for your future. If your budget is tight, just remember that when it comes to saving, something is better than nothing.
Figure Out Your Work Situation
If your baby is still on the way, make sure to talk to your human resources department about maternity and paternity benefits. Based on the information you receive, put together a “post-baby work plan” that outlines which parent will stay home with the baby (and for how long). This plan should cover both short-term and long-term work plans and will directly affect how you design your budget.
For example, after the maternity period, will one parent stay home with the baby, or will both parents return to work? How will the budget need to be adjusted based on that decision?
There is no one-size-fits-all answer here. It’s a big decision with many factors to consider (personal beliefs, daycare costs, potential loss of a company 401(k) plan, benefits, and career track, attachment to work, etc.).
Buy Life Insurance And Write A Will
These are two important steps that are often forgotten (or put off) thanks to the craziness of caring for a newborn.
When buying life insurance, you must decide which type of policy is best for your family as well as how much you want to be insured for. Everyone’s situation is different, so take time to research the best option for your unique situation (or better yet, consult with a financial advisor).
As far as writing a will goes, it may not be fun, but at least you’ll be rest assured knowing that if tragedy strikes, your child will be in safe hands.
Lastly, this is a perfect time to make sure all your beneficiaries are up to date.
Start A College Fund
College isn’t cheap. And when your baby grows up, it’s not going to be any cheaper. That’s why it’s important to open up a 529 plan to start saving for your child’s education right away.
The details of these plans vary by state, so take some time to investigate how it works where you live.
If your budget allows, aim to make regular contributions to this plan. It’s the perfect way to grow your child’s college fund while also lowering your tax bill.
Babies are a blessing, and it’s amazing how fast they grow. One of the best ways to make sure you enjoy the “baby years” is to minimize financial stress. This is best done with a strong financial plan.
If you’d like help putting together a financial road map for you and your growing family, we at Live Oak Wealth Management would love to help. If you’d like more information, feel free to call my office at 770-552-5968 or email [email protected]. Or, if you prefer, you can simply click here to schedule an appointment online.
Matthew Gaude is an *investment advisor representative and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. Working first as a commodity broker and then as a Business Development Manager for a national broker-dealer in previous jobs, he has the insights and experience to help clients understand the complexities of the market and implement strategies to minimize risk. To learn more about Matthew, connect with him on LinkedIn or visit www.liveoakwm.com.
Shawn McGuire is a financial advisor and the co-founder of Live Oak Wealth Management, a financial services firm in Roswell, Georgia. He serves the planning and investment needs of corporate employees, those approaching or in retirement, and 401(k) plan sponsors. He has worked in financial services since 2002 in positions ranging from financial advisor to stock broker and portfolio manager. As a CERTIFIED FINANCIAL PLANNER™ professional, he is trained to help clients with virtually all their financial needs. To learn more about Shawn, connect with him on LinkedIn or visit www.liveoakwm.com.
Securities offered through American Portfolios Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through *American Portfolio Advisors, Inc., a SEC Registered Investment Advisor. Live Oak Wealth Management, LLC is independently owned and not affiliated with APFS or APA.
Any opinions expressed in this forum are not the opinion or view of American Portfolios Financial Services, Inc. (APFS) or American Portfolios Advisors, Inc. (APA) and have not been reviewed by the firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk, and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.