Are you about to welcome a new addition to the family? If your first child is on the way, don’t panic. Besides the impending birth, the great news is that many have been there, done that, which means there are plenty of tried-and-true strategies for dealing with the expenses of a first child. The first step is to create a baby budget that includes all the additional costs you’re apt to encounter during the first year.
After that, the best moves depend on your financial situation and several other factors. Refinancing can make a big difference for adults who owe on student loans. Before the baby arrives, take time to review all your retirement accounts and insurance policies. A CPA (certified public accountant) and licensed insurance agent are the go-to professionals to assist you with this step. Consider speaking with an attorney or paralegal to update or make a will. Here are more details about getting ready for your new family member.
Construct a Baby Budget
Many are often surprised to discover that a baby budget is not that much different than their existing one. However, several extra line items are essential, including one for ongoing medical expenses, food, clothing, bedroom furniture, play items, and more. Remember that you’ll want to redo this budget about two months after the child is born. It’s often necessary to make adjustments to particular items and tweak the amounts until you get them right.
Lower Monthly Spending the Smart Way
In addition to scanning your current budget and eliminating or reducing several unnecessary expenses, it’s crucial to deal with student loan debt head-on. If you owe on more than one education loan, take action to refinance them into a single obligation by working with a reputable lender. There are multiple advantages for doing so, including the chance to simplify your finances, pay less interest, and reset loan payoff dates. Parents who opt for Earnest student loan refinance services can apply online and find out their new monthly payment amount in a matter of minutes.
Review Insurance Policies and Retirement Accounts
Especially if this is your first pregnancy, go over life insurance policies and consider adding your child to appropriate categories, primarily as a beneficiary. Ask your insurance agent how to accomplish this simple but essential task. You can often take care of everything via email and one phone call. Likewise, review retirement accounts with a licensed professional.
Wills, College Funds, and Savings Accounts
If you don’t have a will, now is the time to get busy. If you already have one, speak with a lawyer or licensed paralegal to add your child’s name in the appropriate categories. College seems like a distant dream for a child who is not yet born, but the day will soon arrive. Speak with your banker or accountant about how to set up a legally compliant (for tax purposes) college fund for your new daughter or son. Then, open a savings account in the child’s name about one month after the big event. Set up a payroll deduction of one percent for direct deposit into the fund. Adjust the amount upward later on if possible.