When it comes to baby, you need to be prepared to have the unavoidable discussion surrounding finances. I call it Financial Nesting , and it can be a difficult conversation to have.
For dads, you're likely already stressed trying to figure out how to pay for baby furniture, clothes and the never-ending list of baby accessories like: strollers, high chairs, bottles, bath gear, and the like. You’re probably also concerned about your disappearing space and the possibility that you don’t even have an extra room to turn into a nursery. But here are three reasons you must have the money-talk before baby arrives:
1. It's About the Long Term
Think: college tuition. Cars. Trips. Childcare. Preschool. I know that you'll have 18 years to work towards your unborn child’s college savings account — but 18 years comes pretty quick! And it's important that you and your expectant wife have the conversation NOW. Stop dancing around the subject and talk it through.
2. You Need to Think About the Unexpected
Your wife might take you through each and EVERY possible event and consequence within the next 50 years, so just be prepared to start talking about lots of interesting scenarios. For example, my wife began asking me questions like: “What happens if I die?”; “What happens if you die?”; “What if we both die at the same time?”; “What if you die and then I die three days later?” Even though they're things that may not ever happen — you still need to be prepared.
3. You Need to Have a Plan
Remember your birth plan? Well now, you need a baby plan. If you don’t, then now is the time to get something started — even if it is depositing $50 dollars a month into a savings account. Create a Living Will and decide who will help raise your children should you, or your wife, or both of you get knocked out of the game while you are still young. It will be more helpful than you think, because it will force you to dig into the nitty gritty of child rearing — who (if something should happen to you and your wife) will raise your child to be the person you imagine they'll be? Who will teach them the morals and values you want to bestow on them? You need to think about all the friends and family members who would make worthwhile guardians for your children.
Along with a Living Will, you should consider establishing a Federal 529 education savings plan. These are great because you can start them with a small amount of money, and along the way, grandparents, friends or employers can donate money to the fund. You never know — it could grow as quickly as baby does!
Remember, the two of you will not always agree on the finances, but it’s important to keep the conversation moving none-the-less.