Adding to your family can be an exciting time for everyone. But many people forget that a lot of planning goes into it before hand. The better prepared you are for the expected, the better prepared you are for the unexpected.
New parents do not completely understand or appreciate just how
chaotic the weeks, months and years will be after a little one arrives.
Between the feedings, attempts to sleep and shifting schedules, the
opportunity to sit with a financial professional after the baby is born
can feel almost impossible.
There are a few things new families can do before birth to get in good shape for baby.
1. Pay down debt.
The nine months leading up to
baby is a great time to pay down debt. Typically expenses are lower in
the months leading up to baby’s birth, given diaper costs and baby food
have yet to hit the pocketbook. Many clients strive to live on one
income to increase their savings and pay down debt. If debt is not an
issue, use this time to increase your savings account to prepare for the
new expenses such as a car seat, crib, diapers and delivery costs.
2. Review your coverage.
New parents should understand their current coverage and update and
adjust it if needed. If the ins and outs of benefits at work are
presently a mystery, call human resources for a refresher to understand
what medical coverage and maternity leave policies cover.
Review your life insurance and disability income insurance to make sure it meets a growing family’s needs. Term life insurance
may be an affordable option for most families and can be purchased for a
certain period of time to help protect a family’s financial well-being
in the event of an untimely death. Disability income insurance is
designed to protect a portion of an individual’s income. The bottom line
is that losing the ability to earn an income may make it difficult to
make ends meet. Disability income insurance can be a practical solution
to help protect a family’s financial security in the event of a
disabling illness or injury.
As a parent, don’t guess when it
comes to coverage amount, work with a financial professional whom you
trust and can help you understand your needs in the event either parents
were to become disabled or die.
3. Establish a budget.
Lastly, establish a clear budget prior to the baby arriving so you know
how much money is currently allocated to meet financial needs. This
will allow you to determine how much money you can allocate to the new
expenses such as diapers, formula, day care, baby clothes, etc. or if
you need to cut back on certain expenses to keep you from overspending.
By
taking the time to review these important topics, you will remove the
concern and worry that comes with not knowing what your family has in
place. Instead you will find yourself in a position to simply enjoy the
special moments as a new parent knowing you have taken steps to protect
your family.
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