NDSU Extension Service - Ramsey County

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Ready for Baby

Ready for Baby

 

          New parents have a million things to do – all while short on sleep.  A new baby brings a multitude of tasks and items for the to-do list and now financial experts have the audacity to suggest a few more.  Family finances, both current and present, need revisions when your bundle of joy arrives.  

          Insurance:  Backing up nine months, simply knowing what medical expenses will be covered during the pregnancy is a key to avoiding surprise expenses.  Many times insurance policies do not cover certain medical expenses and that can mean paying out of pocket at a time when money is tight.   Creating a life and disability insurance policy or increasing your existing coverage is also essential. In the event of a tragedy or a debilitating illness, you need to ensure that the mortgage is taken care of and that child care costs are covered.

          A Guardian or two: Appointing a guardian is important since you might prefer a parent or sibling take care of your child instead of letting a court decide.  If your first choice as a guardian has health issues or work that takes them out of the country for extended periods (think military deployment) you may wish to have a back-up plan.

          Balancing long-term plans and short term needs: While it might be tempting to scale back on 401(k) contributions, and instead use those dollars for diapers and daycare, you run the risk of derailing your own retirement plans.  On the other hand, if cash flow is forcing you to charge diapers and baby clothes to your credit card, racking up debt that could be equally damaging.  Look for a balance point that can provide for current, scaled back needs and still safely guard your own retirement plans. Though always make sure you contribute enough that you receive all of the employer's matching funds.

          Prepare a will. Obviously, you hope to enjoy a long life - one in which you see your child grow to adulthood. But none of us can predict the future, so it's essential that you draw up a will to provide for the care of your child, both financially and physically.

 

 

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