Having a baby on the way requires a huge amount of planning. You have to plan all your doctor’s visits, design your child’s room, and figure out how long you’re going to stay out of work post-baby. You might even be planning your meals or researching your childcare options. However, there is one area that many parents forget to plan for – finances.
While financial planning might be the last thing on your mind with a new baby on the way, it is extremely important. After all, according to Time, it takes approximately $245,340 in total to raise a baby from birth to adulthood. That is a huge amount of anyone’s income and requires a great deal of forethought to do effectively. Follow these financial tips to ensure that you and your child have the best financial future possible.
Figure Out Your Financial Goals
It is hard to plan for something if you aren’t quite sure what you’re planning for. While everyone obviously needs to save for retirement and build up a stash for their child’s college, you should break these goals into smaller, more manageable pieces to make working toward them more effective. How much do you want to have saved for retirement by the end of this year? Do you need to save up for a down payment on a house? How much are you going to pay for your child’s college? You might want to hire a financial advisor to work towards these goals specifically and help figure out a way forward.
Figuring out your net worth can be extremely useful in planning for your future and deciding on your short-term financial goals. After all, it can be difficult to decide where you want to go if you don’t even know where you are. To calculate your assets, you will have to figure out the value of your home. Because the value of your house can go up and down, we recommend getting it appraised on a regular basis.
Track Your Spending
With children, a budget is an absolute must. If you’re a new parent, you should revisit your budget to take into account new expenses, such as diapers and food. According to NerdWallet, while you should allow your budget to be flexible to change as your lifestyle changes, you should always have a budget you can stick to it. Even if you’ve been a parent for a while, revisiting your budget regularly can help you stay on track and ensure that your money is being spread out appropriately. You might want to create a budget spreadsheet, which can look complicated at first but make long-term planning extremely easy.
Set Aside Some Emergency Cash
As your family size grows, so should your emergency cash reserve. You should have an emergency fund of at least three months expenses but aim for six months if at all possible. If you’re currently expecting a new bundle of joy, you might want to aim even higher. Often, having a new baby is ripe for sudden, unforeseeable costs or expenses that you simply forgot to plan for. Setting aside some money for things that you forgot to plan for can prevent you from going over budget and give you some wiggle room to adjust.
Automate as Much as Possible
Having children is time-consuming. Automating as much of your savings and expenses as possible can prevent you from accruing late-fees or simply forgetting to put money into savings. With so many companies taking their payment systems online, this can be as easy as a few clicks of a button but can save you a lot of time in the future.
Having a child takes a lot of planning, and financial planning should be on your pre-baby to-do list. Even if you have children, revisiting your financial situation can’t hurt. Taking these easy tips into account can pave the way for a successful financial future for both you and your children.
You might also like:
- Nanny Nuances: How to Find Affordable Child Care
- Parent Problems: 4 Thrifty Ways to Prepare Yourself for Teenagers
- 3 Keys to Teaching Your Kids Financial Literacy
- Give Your Kids or Grandkids a Financial Boost
Photo Credit: Pexels