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Baby on Board: Financial Needs to Handle First [Calculators + Worksheet]
April 27, 2016
Congrats! The joy of welcoming a child into your life is indescribable. Besides the temporary lack of sleep and the hectic schedule, pretty soon you're into a routine that works for you. With this new responsibility comes new financial needs and demands – so which ones do you tackle first?
Here are 5 financial tasks to do right away:
- Add your child to your employer-sponsored health plan. (You usually have up to 30 days to do so.)
- Update your withholding for federal and state income taxes on your W-4.
- Enroll in or change a flexible spending account (FSA). Check with your employer about enrollment and limits.
- Revisit your beneficiary designations on your retirement accounts, life insurance, wills and anything else that you want to pass to your heirs.
- Start or increase your emergency fund savings. The chances of unexpected expenses become greater with another one in the house. A good rule of thumb is to have 3 to 6 months of income.
Other key financial considerations when having a baby
Your spending is changing. Understanding where your money is going and what needs to change so you don't overspend will help reduce that stressor. Use this balanced spending worksheet to help you get started.
Protection – for you & your family
Check out this life insurance calculator to see how much life insurance would protect your family's future. Talk with your financial professional to determine what type – and amounts – of coverage are right for your family. Besides life insurance to cover expenses in the event of an unexpected death, consider disability income insurance to help protect your paycheck.
Create or update your will. Work with your legal professional to make sure all the necessary documents are in place and you have a guardian for your child. Don't let the state determine your child's future if something should happen to you.
Yes, it's important to save for your kids' college education but not at the expense of your retirement savings. If you have a 401(k), keep putting money into your plan – pay yourself first. Check out this retirement calculator to make sure you're on track.
One of the easiest ways to make sure your kids have money for college is to start saving for it now.
- Talk with your financial professional about college funding options.
- Use this college savings calculator to help you develop or fine-tune your college education savings plan.
- Open a savings account in your child's name. It's a great starting point for depositing monetary gifts your child receives.
Work with your financial and legal professionals to help you develop a long-term strategy. It can help you live the retirement you envision and put your child through college without breaking the bank!
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