by Sara Bailey of thewidow.net
Most people don’t think about starting a family in financial terms. Nonetheless, having kids is a big financial decision. Not only do expecting parents have to get their budget in shape before welcoming a child, but it’s also the first time many couples have big conversations about money. As you prepare for your first child, make time for these five important financial steps.
Talk About Finances
Too few couples have in-depth conversations about their finances. However, if you and your spouse aren’t on the same page about money, it inevitably leads to strife.
Sit down and discuss the big financial questions, such as:
● Will we be a single- or dual-income family?
● How much do we need to save for retirement?
● Do we want to pay for our children’s college? What will it cost?
● Are we on track to meet our financial goals?
If the answer to the last question is “No,” it’s time to make changes. Look for ways to reduce your spending, from low-dollar purchases such as groceries to big-ticket items like your mortgage. Many couples are saddled with mortgages they can’t afford. Use a calculator to find out if that’s the case for you; if it is, it’s time downsize or move to a more affordable area.
● Read “How to Talk to Your Spouse About Finances.”
Calculate What Your Child Will Cost
You know babies are expensive, but just how expensive are they? It’s not diapers and bottles that catch new parents off-guard — instead, it’s the cost of child care, health insurance premiums, and unexpected medical bills. Calculate a number based on your babycare plans, then add a hefty sum for an emergency fund.
● Try this Baby Costs Calculator from Babycenter.
Make a Budget and Track Spending
Now that you know how much money your goals require, it’s time to craft your budget. Making a budget is fairly simple — add up your income, subtract your monthly expenses and savings contributions, and designate a sum for discretionary spending. It’s following a budget that’s the hard part. Track your spending with the help of an app to stay accountable.
● Check out these 10 budgeting apps — some are free!
Buy Life Insurance
Life insurance probably wasn’t on your radar before getting pregnant, but it should be now. Life insurance covers funeral expenses and lost income if one parent dies. Without it, your family would struggle to get by in a tragedy. Term life insurance is an affordable solution for parents. Rather than paying higher premiums for a policy that lasts your whole life, you can buy a term policy that lasts 20 or 30 years so you’re covered until your children are grown.
● Learn more about life insurance at CreditDonkey.
Write a Will
Everyone should write or update their will before welcoming their first child. A will dictates what happens in a worst-case scenario if both you and your spouse die, leaving children behind. In your will, you’ll name guardians for your children, explain your wishes for their care, and spell out how your assets and life insurance policy are to be distributed. While no parent wants to think about not being there for their children, writing a will is a step you can’t afford to skip.
● Read more about how a will protects your family at The Balance.
Now more than ever, it’s important that you and your spouse have a clear picture of your financial future. When you’re on the same page about how you’ll care for your children, maintain a home, and plan for the future, you have a solid foundation upon which to build a family.
Image via Unsplash