Having a baby creates a whole new set of financial responsibilities and it can be confusing to know where to start. If you want to give your family the financial security it deserves, here are four steps that will put you on the right track.
1. Talk money with your honey
If you have a spouse or partner, openly talking about money is the foundation of your financial future. You can do almost everything else right and still run into trouble if the two of you aren’t on the same page.
Pick a time that you know you can have to yourselves every week and make it a priority. Talk about your financial issues, but try to keep things laid back too. After all, this isn’t a congressional hearing. It’s just a chance for you two to keep each other informed and stay on the same page. A glass of wine or a pizza can keep things from feeling too heavy.
2. Build up a “mistakes” fund
No matter how good you are with your money, that first year of parenthood can be a little turbulent. There are so many new things you’re responsible for and the truth is that there are moments where it can be hard to keep track of where all that money is going. Even the best of us will make mistakes.
The best way to handle them is to expect that they will happen and be prepared. Having a little extra savings around will help you weather those hiccups without worrying about how all the bills are going to be paid.
3. Make sure you have good insurance
Insurance isn’t anybody’s favorite topic, but it’s an absolute life-saver when you need it.
Whether you’re working or staying home with the kids, life insurance is a must, and working parents are probably going to want long-term disability insurance as well. Both of these will help make sure that your family has the money it needs to live its daily life no matter what.
Don’t forget to add your baby to your health insurance, and figure out what it will and won’t cover. This is also a good time to review the liability coverage on your auto and homeowners/renters policies, and consider purchasing an umbrella policy as well.
If this all sounds like a lot of insurance, that’s because it is. Bringing a baby into the world means you have a lot to protect and insurance is often the easiest and cheapest way to do it.
4. Save some cash for fun too
Having a baby doesn’t mean your personal life has to end completely. Expect that there will be many more nights in than there used to be, but make sure you save at least a little bit of money for some fun too.
Get a babysitter or drop the kids off at Grammy and Grampy’s and get out and enjoy yourself every once in a while. Everyone will be better off for it.
Do you have a financial plan for baby?