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A baby changes your financial plan, too! Check out this 5-step new baby financial plan
Your symptoms: that pregnant mama glow, a ticker-tape to-do list and, recently, a need for support when tying your shoes. Congrats! You're having a baby!
It'll come as no surprise to you, as it seems everything is changing so rapidly, that having a baby changes everything, the least of which is your finances and complete financial plan. That's why we're here to help.
First step is to start planning
First, log onto Pocketnest and update your life milestones! That way, we can send you better, more customized financial tips, strategies and resources.
Why should you update your financial plan when you're having a baby?
We recommend getting things in order, sooner rather than later. That way, you can knock a few items out now, such as your budget, and leave yourself headspace once that babe arrives for the items financial items that you need to take care of immediately, like adding that child to your health insurance plan and considering life insurance and estate planning.
New baby financial check-list
Before we dig into all the goodies of what to do with your finances when you're expecting, see below for an at-a-glance new baby financial check-list:
Health Insurance
Dependent Benefits
Estate Plan
Life Insurance
College Savings
Budget
New baby financial items to do immediately
The first few days with your new baby is magical. Lots of newborn coos, snuggles and getting to know one another (in addition to a few sleepless nights, late-night feedings, and tears—both yours and the baby's). Savor this beautiful time! And, knock out a couple super important financial to-dos, right out the gate.
1. Add your baby to your health insurance
Within the first 30 days with your new bundle of joy, you'll most likely want to add your child to your or your partner's work-sponsored health insurance plan. If possible, fill out this paperwork beforehand.
2. Explore any other dependent benefits.
Your employer or your partner's employer may offer dependent care benefits. Be sure to know what each of your employers offer and, importantly, if you qualify. Keep in mind that you may also qualify for other tax benefits. Talk to your tax professional about what you may qualify for, as far as dependent care for your children.
New baby financial items with a less timely deadline
Over the course of your baby's early days, there are a host of other financial things to straighten out, but in a less timely manner. These items include education savings plans, budget updates and revisiting beneficiary designations on tax deferred accounts. While still important, these items don't have a tight of a timeline as other items.
3. Get an estate plan
Create a will with guardianship in the event that something happens to you and your spouse. It's a tough conversation to consider who will take care of your most precious loved one, but it's better that you have a say in that decision vs the state making that call. Don't have one yet? We can help you create one. (See: When to Create Your Estate Plan.)
4. Consider life insurance
Typically, if someone else depends on your income, life insurance may be an important tool in your tool box. Much like kicking off your estate plan, it can be a bit morose to consider your child's life after your passing. Sad as it may be, it is incredibly important to make sure those you love are well cared for in the event of your passing. Don't know how much life insurance to get? We can help! (See: Life Insurance Tips?)
5. Set up a college savings plan (otherwise known as a 529 plan)
Sure, college may feel like it's a million years away as you stare into your beautiful newborn baby's eyes. But, time sure does fly. And, that paycheck goes faster than you'd think! For those reasons, and many more, we recommend you set up a 529 college savings plan for your child sooner rather than later. Set up your child's 529 plan, even if you cannot fund it with more than the minimum investment. Whether you have high debt to pay off or are in the process of funding your emergency cash reserve, we recommend you take the important step of at least opening a 529 savings account for your child. You may be surprised at who else would like to contribute. Anytime you receive cash for your child as gifts, consider popping some of it into this account.
Before you get too cozy, knowing that these items aren't ASAP to-dos, remember that they still need to get done! Especially with a fuller house and more responsibilities—and less sleep—it seems the more time we have, the more we put these not-so-hot to-do items off. And that can have serious, detrimental consequences. (But, don't worry. That's why we're here! We'll send you reminders to get these important items done.)
That brings us to the rest of your financial plan. Baby or not, we all need a complete financial plan.
Financial items to get done—baby or not!
If you get through all of those, now is a great time to get the remainder of your financial planning items in order like your budget, debt planning, net worth snapshot, income tax planning etc. Want a quick refresher? Take a peek at our financial wellness guide. (See: Free Guide: Financial Wellness Check-up.)
And, what's even better than a blog post? The Pocketnest app! Download the app (it's free!) and find your way to financial wellness in just 3 minutes a week. We'll walk you through all ten themes of financial planning, so you'll know your plan is airtight. Get started! Download Pocketnest!
Disclaimer: The information provided is not intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. We encourage you to seek specific advice from your personal tax or legal counsel.
Great news! The Pocketnest app is now available! Download Pocketnest and get your finances in order—in just 3 minutes a week! No jargony finance-speak, pricey fees or in-person meetings required.
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