NDSU Extension Service - Ramsey County

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Congratulations on Your Recent Debt Arrival!

Congratulations on Your Recent Debt Arrival!                 

 

 

When congratulating someone on the birth of a child, we certainly don’t include references to how many dollars are needed to support that child; but the addition of a child to a family does have major financial implications. As parents it is extremely important to make decisions that will ensure your child’s financial well-being. 

 

Following is a checklist of items for new parents to consider addressing before or shortly after their new bundle of joy arrives:

 

Life insurance – Costs such as day care, housing, health insurance, cost of future education, etc. need to be considered and a realistic budget created if one parent should die.  Once this is done, you can work with an insurance agent to determine the amount and types of life insurance needed.   

 

Update your budget – If a new baby also means living on one income, new parents can quickly go into budget shock.  Take time to set up a budget to determine if there will be some aspects of your lifestyle that will need to be cut back.  The average family spends about $7,000 for a child’s first year of life and that is just the beginning of the financial impact.

 

          College savings - The earlier you start the better.  By consistently putting away some dollars each month, the total when it comes time for college can be a welcome sight.

 

Create a will - New parents need to make sure they set up a will and identify a guardian for their child should both parents terminate unexpectedly.  You might also consider a financial guardian to authorize the use of life insurance proceeds and other assets to raise the child. 

 

Update beneficiary information - This is so important and only takes a few minutes to do.  Go over your various financial accounts and insurance policies and determine the appropriate beneficiary.  If it is financially viable, consider leaving your tax deferred accounts (IRA, 401k etc.) to your child.  This extends the tax deferring benefit in the accounts.

 

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