Starting a Family
![A tiny baby holding the finger of its parent.](/media/36041/starting-a-family-header-image.jpg?anchor=center&mode=crop&width=1200&height=418&rnd=132827546850370000&format=jpg&quality=80)
Babies change a lot in a family, and finances aren’t immune. There is plenty you can do to prepare whether you’re a new parent or a seasoned vet.
Know the Costs
Medical Expenses: Depending on your insurance coverage, you might need to pay for part (or all) of the hospital expenses. Research what this cost may be so that you’re prepared when those bills come in.
Reduced Income: If one or both parents are staying home for a period of time after the baby is born, your income will be reduced. How much depends on your vacation accruals, disability coverage, etc. Prepare in advance for this lost income by calculating what your income will be and setting aside some cash now in order to have a cushion when the time comes.
Health Insurance: Research policies so you’re prepared to select the best option once your baby is born. If you know this well in advance, you can also plan for the increased healthcare expenses by setting aside the amount you’ll pay in increased coverage. You’ll have more time to get used to ‘living’ on that amount, plus you’ll be able to bolster your savings.
Daycare: There’s no way around it; daycare is expensive. Regardless of whether you choose a facility or in-home care, it will take a big chunk out of your monthly budget. If your employer offers a Flexible Spending Account, take advantage. With these accounts, you’ll be able to add a portion of your pay to the account pre-tax. Then you can get reimbursements from that account as your funds accumulate. This can mean significant savings over taking the tax credit for daycare expenses.
Budget: Babies are expensive, and the best way to prepare financially is to set a budget and stick to it. The Rivermark Financial Coaches are here to help you set a budget your can stick to. Give them a call to set up an appointment 503-626-6600.
Save for the Future
It’s always the right time to set-up an emergency fund (shoot for 3-6 months of post-tax income) and to start saving for college. To start an emergency fund, set-up a Name Your Savings account to encourage you to be ‘hands off’ unless absolutely necessary. You can also start saving for your child’s education expenses this way. Just $50 per month starting at birth will yield $10,800 by the time your child reaches 18…and that’s without factoring in interest.
You can also start a college savings plan early by opening an IRA account. Some IRAs, like a Coverdell Education IRA, are intended specifically for education expenses. They have some great tax advantages, and are worth a look when you’re ready to start saving for your child’s education.
Create a Safety Net
Increasing insurance coverage, life insurance, and emergency funds are all great ways to protect your growing family. Consider increasing or bundling (or both) your auto loan insurance to get a better deal and to make sure that you’re sufficiently protected in the case of an accident. Review your homeowners or renters insurance policy to make sure that you have enough coverage in case of an accident. Not having enough home or auto loan insurance, for example, can leave you open to a lawsuit where your personal assets are on the line.
You’ll also want to protect your family in case the unthinkable happens, so as unpleasant as it might be, life insurance is a great investment. The younger you are when you sign up, the lower the rates in most cases, so don’t delay. As a member of Rivermark, you’ll get great rate advantages when you choose us for auto, home, and life insurance.