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Financial Checklist for New Parents

Posted By Patrick On 07/22/2009 @ 10:32 am In Personal Finance | 13 Comments

My wife and I recently had our first child, and to say it has changed our life is an understatement. Raising a child is an amazing responsibility, and it doesn’t stop with feeding and caring for him or her. Somewhere between the late night feedings, diaper changes, and doctors appointments, you will need to take care of an assortment of extra activities to make sure you have our finances in order. There are many things you will need to do when your child arrives and you will have many distractions, so I recommend creating a checklist so you don’t miss anything.

Before Child (B.C.)

Raising a child will have a dramatic impact on your finances. Your expenses will climb at a time when your income may drop. Your added expenses may include food, diapers, clothing, doctors visits, medicine, child care, toys, and more. This change will catch you off guard if you aren’t ready for it, so the best time to prepare for this life changing event is well before you plan on having children.

Because your expenses will climb, I recommend creating a budget and finding a way to reduce your monthly expenses. That will help give you a buffer zone to allow for the irregular expenses you will experience when your child arrives. In addition, you should create an emergency fund to help handle any unexpected expenses that may arise. For more information about starting a strong financial plan, check out Dave Ramsey’s Baby Steps [3].

My wife and I started planning for our child about two years ago. We paid off all our debt and started living on one salary in preparation for my wife to become a stay at home mom [4]. You may not need to plan two years in advance, but I recommend staring on your path to financial security as soon as you learn you are expecting – if not sooner.

After Child (A.D.)

This is when the fun begins, and I’m not referring to diaper changes! You will probably be in a daze for the first few weeks as you and your baby try to settle on a schedule, but there are many important things to take care of:

  • Add your child to health insurance (you usually have 30 days to add your child to your employer sponsored health insurance for a life changing event).
  • Apply for child’s Social Security Number (some hospitals complete the paperwork for you).
  • Reevaluate your life insurance and update your beneficiaries.
  • Update your estate plan: create a will if you have not already done so, and be sure to specify a guardian for your children.
  • Update your budget: Be flexible the first few months – you will have a lot of new expenses to track.

Start your child on the right path

Your child will be too young to understand what it means to save money, but that doesn’t mean you can’t start for him or her. You can open a savings account [5] and start saving the monetary gifts your child receives for his or her birthday, holidays, etc.

Consider opening a 529 Savings Plan or Coverdell ESA [6] for your child’s college expenses. These college savings plans offer tax advantages when the money is withdrawn for qualified educational expenses, no small matter when it comes time for the little critter to go off to college.

Raising a child is a lot of work, but it is also one of the most rewarding experiences you can have. Hopefully these tips can help relieve you stress so you can spend your time on more important issues – like caring for your child!

This is a guest article written by Patrick, who writes about personal finance, small business, and career topics at Cash Money Life [7].

(Photo: tedsblog [8])

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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/financial-checklist-for-new-parents.html

[3] Dave Ramsey’s Baby Steps: http://cashmoneylife.com/2008/02/25/dave-ramsey-baby-steps-financial-peace-university/

[4] become a stay at home mom: http://cashmoneylife.com/2009/04/27/decide-stay-at-home-mom-working-mom/

[5] savings account: http://www.bargaineering.com/articles/top-5-online-banks-savings-or-checking-accounts.html

[6] 529 Savings Plan or Coverdell ESA: http://cashmoneylife.com/2009/03/11/college-savings-plans-529-vs-coverdell-esa/

[7] Cash Money Life: http://cashmoneylife.com/

[8] tedsblog: http://www.flickr.com/photos/tedsblog/43433812/sizes/m/

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