Having a baby and growing your family is a very exciting time for any new parent or parent-to-be—and there are some pretty significant things to consider outside of simply getting the nursery ready and picking out a stroller. There are studies showing that each child will cost about $250,000 over the course of 18 years. However, don’t let that scare you. Take the time to go through this financial to-do list as you get ready to welcome your new baby.
Your New Baby Financial Checklist
1.) Purchase life Insurance. Term is typically what I recommend, and 30 years is sufficient for a first child. Get enough to replace what you would rely on for you and your spouse. Stay at home parents have tremendous value in particular, and for planning purposes I use $50,000/year. I usually say get enough to: Pay off the house, loans, and any bills plus 5 times the annual salary for each person and $100,000 per child for a 4-year college. If you want to plan for additional schooling, weddings, etc. add that in accordingly.
2.) Setup a college savings plan. There are many options that range from prepaid tuition, 529 plans, and even putting money in a custodian account in your child’s name that you manage until age 18. To help decide on the option that’s best for you, talk to a Stonepath Wealth Management advisor.
3.) Research preschools, daycare, and other places you might want to join, like an athletic club or place that would have a long wait list. If you look for these places at the time your child wants to go, it might be too late. In a strong economy, many of the best places have wait lists.
4.) Update your will. Make plans and organize your financial affairs for yourself as well as for your children. Decide who you would want to care for your children and have a conversation with them to see if they would be willing to help if something happens to you and your spouse.
5.) Long-Term Disability Insurance is also key. Life insurance might get all the publicity, but if you aren’t able to work, your family will experience a burden. You should make sure that you have long-term disability insurance as this can replace income if you are no longer able to work at the same type of job for various reasons.
This is a list that offers a good place to start. For more assistance as you plan a strategy to realize a healthy financial future for your family, contact Stonepath Wealth Management today!