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A new baby on the way often brings feelings of exhilaration and excitement. It also brings with it the a new host of expenses—if you are unprepared financially for such endeavors, it can be quite daunting attempting to meet your new financial obligations. However, by following a few simple tips, you can ensure that you are ready to handle the new price of parenthood.
Consider doing some or all of the following, and you will be much better prepared to meet new financial goals.
Many expectant and new parents fail to take into account that they must define new financial goals. Both short and long-term goals must be set, such as setting aside extra money on a new weekly or monthly budget, as well as planning for the future with 401K plans and college funds.
Be sure to revisit your financial situation every so often to see if priorities have changed and revise your goals accordingly.
With your new goals, you can better prepare a new budget. Be realistic and make a list of all the things that are definitely necessary, and some things you can possibly do without for a time, such as a magazine subscription or the bigger cable channel package. Track your spending, and be sure to include all new expenses, as well as plan for future expenses. You may need to adjust your budget every so often as your child grows, because a new child always brings new expenses. Take advantage of baby-related freebies to help trim your budget.
Tip: Be sure to set aside a certain amount for health care and deductibles for your child—regular visits to a pediatrician are pretty common.
In addition to setting up savings accounts such as 401(k) plans or college funds, it is a good idea to set up a reserve savings for unexpected emergencies. A good guideline is to have 2-3 months of living expenses in an emergency fund. If that amount seems daunting, don’t forget there are several good methods for saving up an emergency fund without feeling (too much of) a pinch.
It’s never too early to set up a good life insurance plan. Speak to a financial professional to learn more about your options and to determine what type of coverage would be the most suitable.
While not everything on this list needs to be taken care of right away, it will serve as an important reminder of future obligations. Important things to include on the list include creating a will, setting aside money for a down payment on a house, and maybe even early planning for your next child!