It is the longest 12 months imaginable and yet it goes by in the blink of an eye. From the discovery that a baby is on the way to the baby’s birth, it’s a whirlwind of hopes, plans, and anxious moments. Having any child is exciting, but there is something unique about the first one because it’s a life-changing event unlike any other. There is a lot to plan, and even more to do, starting with the baby’s bedroom.
“Where do I buy those huge soft, letter blocks, anyway? Target? Costco? Parties to Go?”
Good question, but you may want to consider other decisions that are more important over time. Some of these decisions will matter for the life-span of the family you are starting. Your friends at Gildshire put together some financial steps to take before starting a family.
#1 – Prepare a Last Will and Testament
This is the last thing on your mind, am I right? New parents are so involved in today they find it impossible to think about the inevitable. There will come a time when Mom and Dad aren’t around. Addressing the estate is critical. Acquire a law professional now, even before the child arrives on the scene. If something tragic happens tomorrow, you want to know your child is protected. We understand that nobody wants to think about mortality at the very outset of forming a family, but to think ahead (Lord willing, way ahead) is the job of a parent.
#2 – Create a Family Budget
Stop me if you have heard this. A baby changes your life. An understatement and a half. Your new family is about to experience a bunch of changes. Here are just a few:
An accurate (and followable) budget helps anticipate cash and expense changes. A budget will engender less uncertainty about the family’s anticipated lifestyle. Please remember that a budget is fluid over time, and subject to tweaks and changes when life’s reality bumps it around. Follow your budget, but don’t become a slave to it.
#3 — Explore Your Life Insurance
This is one that many young parents get wrong. Most couples tend to underestimate the surviving parent’s needs when a prime provider passes away. While young parents may have little in total assets, life insurance helps replace what is needed to keep the family’s lifestyle stable, fund a child’s education through high school and beyond, all while paying the mortgage. The months leading to the blessed arrival are time to check in with an insurance pro. Don’t forget about a life policy for the stay-at-home parent, if there is to be one. If a life-ending tragedy hits, the survivor parent has to fund long-term, full-time childcare, as well as income support that allows he/she to spend quality time with a child who just lost a beloved parent.
#4 — Re-visit Your Family’s Savings Plan
Saving money and investing wisely. Those aren’t high priority items for newly married, or childless couples. Those are the days when you ride to San Diego on the back of a motorcycle. But it must become a priority starting today. A new baby alters both your spending and savings plans a lot, and here’s some bad news. Your family’s budget will never return to what was once normal. Parenthood is an expensive undertaking. The future will entail some expenses you haven’t begun to consider. A savings plan is critical to your family’s financial (and probably emotional) well-being.
#5 Create an Emergency Fund
The total number of emergencies that are possible just made a quantum jump. Financial professionals differ about how much of an emergency fund you actually need. However, they agree on one thing. Living paycheck to paycheck isn’t your best new parent plan.
Was that too negative? We didn’t mean it to be, but it is so important to discuss these matters. That said, know that parenting is the most exciting job you’ll encounter. It will forever be the job you find most interesting. Are you stressing a bit? That’s normal, and with the kind of financial planning we discussed, the stress level diminishes. Gildshire promises that’s true. Can we come to your gender-reveal? We’ll bring cake!