As Mother's Day and Father's Day are celebrated, expecting new parents in the Capital Region have a whirlwind of plans to make and tasks to accomplish.
Bringing a newborn into the world brings expectations, pride, and dreams for the future. Here are some vital actions to consider before the excitement and hustle pre-due date rush in.
- Communicate with your partner. The theoretical talks of the past are now real. Decisions will have to be made. Nothing should be assumed. So, the first financial tip for expecting parents is to talk about the issues. Will one of you stay home? If so, for how long? Could all of you live on just one income? If you think so, what makes you confident? Things may change and that will be OK.
- Live within your means. It’s more important than ever to make sure to live within your means. Resist the temptation to use your new arrival as an excuse to purchase things you can’t afford and don’t really need. If you have a car with four doors and four tires, you already have a “family car.” Your apartment or existing home is probably big enough to accommodate the baby. Try to put off a major move for as long as possible. Buy what’s important to you within the limits of what you can actually afford.
- Start an emergency fund--right away. If you haven’t already done so, there’s no time like the present to start an emergency fund. The traditional three to six months of income sounds like a lot and it can be. But it’s better to have some money set aside than none at all. Do what is possible. Remember, you’re trying to set aside three to six months of non-discretionary living expenses only, not your full monthly income. If you wish to have one partner stay at home for an extended period, one easy way to build your emergency fund is to practice living on one income while both spouses are still working. The more people in the family, the greater chance there will be for some kind of emergency.
- Buy life insurance outside of work. Most work plans provide inadequate coverage. The concept of responsibility changes immediately upon "hearing the good news." Now, someone will be depending on your income for years to come. You’ll need to be sure that if something unfortunate happens to you, your child can still maintain the lifestyle you’ve been providing. Only life insurance can provide that financial security. It creates an immediate cash estate for the family (and families need only one policy...the child doesn't need a policy).
- Sign up for the health insurance reimbursement account at work. Also known as a flexible spending account (FSA), this account requiring minor paperwork can effectively save you 25 per cent or more (depending on your tax rate) on your medical expenses. When you’re expecting, you’re going to have big medical bills, including prenatal care and delivery.
In the excitement of your pending arrival, don’t overspend and remember that what really matters is not the designer name, brand, or expense of your child’s bedding, furniture, or stroller, but rather your love and care for them.