Major life events are often the impetus to begin comprehensive financial planning—and few events are bigger than welcoming a new child. Whether you are expecting, have just brought your new baby home or want to play catch-up, here are five finance tips to help you get started.
- Apply for a Social Security number. You’ll need this to establish savings accounts in the child’s name, to add them to your health insurance and to claim them as a dependent when filing your taxes. For a newborn, your hospital should provide you with the necessary paperwork. For adoptees, your adoption agency should be able to help.
- Begin budgeting (if you haven’t already). Baby budgeting means more than just adding diapers to the grocery list. Insurance, clothing, child care and education among other expenses also factor in. Consider saving for future education costs for your child by using a tax-free 529 plan. Finally, be sure you can continue making regular contributions to your retirement and investment accounts. Here’s our Budget Worksheet to get you started.
- Add your baby to your health insurance. In all the excitement and stress that comes with growing your family, you won’t want to forget this one. Once your baby is born, you only have a 30-day window to add your newborn to your health insurance coverage. Notify your employer’s HR department or your insurer as soon as possible.
- Review insurance coverage. Even if you already have life and disability insurance, you may need to update those policies. Disability insurance can help replace at least a portion of your salary if you are unable to work. And life insurance can provide for your loved ones’ futures if the unthinkable happens.
- Update your estate plan. You’ll want your child to be well cared for if you pass away. Update your will to reflect your wishes, designate a guardian and leave clear instructions for your child’s inheritance. After your new baby is born, you’ll also want to consider updating your beneficiary designations to include your child on your various accounts.
Baby budgeting means more than just adding diapers to the grocery list.
This list is by no means exhaustive, but we hope you found these five finance tips useful; for more, please read our Financial Checklist for New Parents. Of course, if you have any questions about your specific situation, please contact your portfolio team. We are happy to help.