Financially Prepare for Baby

7.12.17

From researching top-of-the-line car seats and cribs to decorating a nursery, there is a lot to do when you are expecting. One of the most important items to add to your to-do list when preparing for your new bundle of joy is thinking about your finances.

Smart financial planning will help provide peace-of-mind for your expanding family. Here are some considerations to prioritize before your baby arrives.

Slow down the baby train.

It is easy to get caught up by the cute little outfits, baby furniture and the latest gizmos, but they can come with a hefty price tag. While you should never economize on safety items like car seats, there is no reason to spend big bucks on an outfit your child will outgrow in two weeks. It is important to think about what your baby will actually need rather than scanning every item in the store onto your registry.

Create or review your budget.

Your current budget or spending may be centered on supporting one or two adults. Having a baby brings a lot of additional expenses. It costs approximately $233,610 to raise a child from birth through age 17—that does not even include college expenses1! The first step is to get a clear picture of how much you earn, how much you spend and how much you save. From there, you can find areas to adjust and determine how to factor in feeding and clothing your baby not to mention childcare, saving for college and all the other things having a baby requires. Check your financial institution’s online tools for budgeting and tracking expenses. There are also many popular smartphone apps to choose from.

Consider childcare costs.

Speaking of childcare, if you anticipate needing it the sooner you explore your options the better. Do not wait until you are cradling your little one in your arms. It is important to determine whether a daycare center, nanny or family members and friends will work best for your family. Make a set amount you can spend and take a look at what is available in your area. By doing your due diligence now, you will be able to save up before your baby’s arrival.

Prepare for parental leave.

How much time you and your partner get off work and whether you are paid during that period can significantly impact your household finances in the coming year. It is important to understand what your employer offers.

As a federal employee, new mothers and fathers may take at least six to eight weeks of sick leave, followed by additional time to bond with their child through annual leave or the Family Medical Leave Act (FMLA). The FMLA guarantees that Federal employees may take up to 12 weeks of unpaid leave within a year of the birth or adoption of a child so that new parents can have extra time with their families. It is important to consider that taking unpaid leave impacts your income. Examine your budget and save for the paycheck-free weeks ahead.

Federal employees are also granted flexible options. For example, employees can use FMLA intermittently. Meaning, one day a week for 12 months rather than using 12 weeks all at once. Some offices also offer adjusted work schedules, with flexible start and end times. You may also consider switching to a part-time schedule, but it is important to make sure you can afford to.

Check out OPM’s Handbook for Parental Leave.

Choose an in-network pediatrician.

Your baby’s first doctor appointment will come within her first week of life, so you will want to have a physician picked out beforehand. In searching for the right doctor, verify that they are in-network as it can lower your out-of-pocket expenses—Compass Rose Health Plan members are covered at 90% in-network. Use our Provider Directory to locate doctors that are available in your area. It also shows quality ratings and reviews to help you make your choice.

It is also important to add your child to your policy. Under FEHB Plans, you may submit your enrollment change from 31 days before to 60 days after the change in family status. If you are a Compass Rose Health Plan member, give us a call at (866) 368-7227 (option 3).

Purchase life insurance.

Your baby will depend on you. Not only now, but as they grow up. Life is full of the unexpected, so it is important to be prepared should something happen to you or your partner. Life insurance can help provide the financial support your family needs. Federal employees qualify for competitive rates through the Compass Rose Group Term Life Insurance Plan, underwritten by New York Life Insurance Company. A Term Life policy will help cover you during the period when you need it most—learn more.

Create a will.

Most people think they do not need a will until they are much older. One of the important aspects of a will for new families is designating who has guardianship of your child in the event you and your partner pass away. It is also a way to distribute your assets. If you do not make your wishes known, it will be left to the court to choose the best course of action for your child. Creating a will is not hard. Consider our Legal Protection provided by LegalShield. You receive access to an experienced, responsive and reliable law firm in your area to assist with your legal matters whenever the need may arise for just $15.95 a month. It is that simple. Enroll now.

Keep Saving.

When a child arrives, it is easy to forget your personal goals and long-term plans in light of this huge responsibility. Stay on top of your retirement plans. In addition, start saving for your child’s education. College is costly, but you can make it more manageable by starting to save early.

Having a baby can be a big financial adjustment, but the rewards of being a parent are priceless. Start tackling your financial to-do list by prioritizing and addressing the most important items first. The months before your baby arrives can be a whirlwind. But taking time to financially prepare can provide peace-of-mind during this busy time, and allow you to focus on your family after your baby’s arrival.


Sources:
http://money.cnn.com/2017/01/09/pf/cost-of-raising-a-child-2015/index.html

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