After 15 years of marriage and to the great joy of my longsuffering
mother, my wife and I are being blessed this year with a new baby. In preparation for
her arrival, my wife Lori and I are tackling a financial to-do list custom made
for parents-to-be.
Revise the budget.
Expect increases in all budget items, even miscellaneous
expenses such as utility bills, laundry detergent and tissues
because you likely will be home more often. The good news (at
least, financially speaking!) is that you’ll probably be spending less
money on entertainment. The Consumer Credit Counseling
Service suggests a minimum increase of $200 per month.
Prepare for reduced income.
Plan out your expected income and expenses.
Make sure you can make ends meet in those first few
joyful — but stressful and expensive — months. Mom with jobs
outside the house should check whether their short-term disability
insurance covers pregnancy. Your employer may be required to
grant you time off under the Family Medical Leave Act (FMLA), but
the company isn’t obligated to pay you while you’re gone.
Review your medical insurance. Find out how much it will cost to
add a dependent. Investigate your medical insurance’s prenatal
care coverage as well as sick and well-baby visits. If spouses
have separate health insurance policies, compare the plans.
Splitting your family’s coverage between the two plans might be
beneficial.
Buy life and long - term disability insurance.
Life insurance for a stay-at-home parent is just as
important as insuring the one who works outside the
home – and long-term disability insurance is
essential in helping provide for your family if the unexpected
occurs and you’re unable to bring home a paycheck.
Consider childcare costs. If staying at home with baby isn’t an
option, you can deduct your childcare expenses from your taxable
income. Choose a licensed provider so you can report his or her
social security number to the IRS when claiming this deduction.
Start a college savings fund.
Put away a little each month and stick with it. With
help from compounding interest, this money will
grow over time and help fund the single largest ticket item in your
child’s future.
Get your estate in order.
Have an attorney draw up a will and
choose a guardian and asset manager for your child.
Remember to update your beneficiary designations on
all savings and investment accounts.
