Having a new baby on the way can be both an exciting and financially challenging time. If you’re getting ready for an infant to arrive, here are three things you should know in order to prepare:
Prepare for the unexpected
Unexpected events – like losing your job, getting sick, or a leaky roof – can happen. When another person relies on you, it’s even more important to be prepared for unforeseen circumstances. This can mean building an emergency fund in advance of your baby’s arrival to create a cushion in case something happens, like a big expense or extended period of unemployment.
Many new parents also choose to purchase life insurance in case a parent passes away unexpectedly. The death benefit from a life insurance policy can provide financial security for the surviving parent and child. Death benefits are generally tax-free and can be used for anything, including tuition, a mortgage, or childcare.
Tuition costs are rising
Tuition costs have been rising steadily for decades, and there’s no reason to believe that this trend will change any time soon. There’s no way to predict exactly how much tuition will cost when your child goes to college, but parents who are expecting a child can benefit from saving for tuition early. There are a number of ways to do this efficiently, including opening a 529 savings plan. By getting ahead of saving, and steadily working toward this financial goal, parents can help ensure that their children have the resources they need to pursue higher education if they choose to.
Have a plan for childcare
Having a plan for childcare is especially important if you’re returning to work after parental leave. There are several different options available, and it’s important to choose the one that’s right for you and your family. You may decide to enroll your baby in a daycare, find a nanny, or have a relative watch your child.
As childcare costs continue to rise, paying for childcare can be a big financial burden for families. There are a few things you can do to prepare for this major expense. First, research any discounts available. Some childcare providers offer discounts to military service members. Others offer sibling discounts, which can be helpful if you’re planning to have a second child. Secondly, take advantage of any employer-sponsored childcare benefits. Many employers offer flexible spending accounts or other programs that can help offset the cost of childcare. Be sure to check with your HR department to see what options are available to you. Finally, research government assistance programs and tax breaks. Depending on your income and financial situation, you may be eligible for subsidies or other forms of aid.