As a bankruptcy attorney, I’ve seen financial problems run the gamut from crippling student loan debt to medical bills to unemployment to caring for an elderly parent. As you move into the next chapter of your life as a parent, your financial strategy and spending habits will change. How could you not splurge on photo sessions, toys, and clothes for your new bundle of joy? Here are some financial tips for new parents. They will help ensure you get off on the right foot financially.
According to a Forbes article, you should:
Get a Social Security Card and Proof of Citizenship
If the hospital where your child was born doesn’t provide a birth certificate or apply for a social security number, if your child wasn’t born in the hospital, or if you adopt a child, it is important to take care of this.
Build an emergency fund
We all know unexpected emergencies happen, and once a baby comes into your life, having funds tucked away in case of unemployment or an expensive car repair is more important than ever.
Add your child to your health insurance.
- If you do not have health insurance, there are programs available for affordable or free children’s health insurance.
- If you have a health savings account, or if your employer offers one, take advantage and increase your contribution.
Add your child to your retirement plans.
- Remember to do this for your IRAs, 401(k), 403(b), and pension plans.
- If you have not started saving for retirement, get going!
Get life insurance or increase your life insurance.
- Remember, the chief purpose of life insurance is income replacement.
- You should also consider disability insurance.
- Start saving for college.
- A common way to save is a 529-plan.
Update your will.
- If you don’t have an estate plan (will, trust, durable power of attorney, healthcare power of attorney, etc.) get one.
- If you do have a plan, update it with your child.
Claim the child on your income tax returns.
- You may need to adjust your tax withholding.
- From Child Tax Credits, Child and Dependent Care Tax Credits, and/or the Adoption Credit, you can likely save money on your taxes.
- Find out of your employer offers flexible spending accounts or childcare subsidies.
- Create a household budget.
- Your budget should include baby clothes, diapers, food, and childcare.
Starting a family is one of the most exciting things that you will enjoy as a human being. That said, parents have major responsibilities – emotional, financial, etc. Since there is no playbook, hopefully these financial tips for new parents are beneficial to you. However, If you find that you are struggling financially, we can help with debt negotiation, consolidation, or if your situation requires it, bankruptcy. Call us – we will listen to you and help with a path forward.