There are a few life-defining moments we encounter that radically change the way we view ourselves and the world around us. One of those groundbreaking moments is when you finally hold your new child for the very first time. Now that you are a parent, you are likely reeling from the rush of emotions — primarily joy — but also a little bit of uncertainty.
Taking responsibility over a little human being is a lot of work, and it demands a lot of time and money. It’s okay to be a little worried about your financial future now that you’re a parent. In fact, now is the best time to orient yourself and start thinking toward the future. Here are four tips to help you financially plan for your family’s future.
Assess Your Current Financial Situation
Most parents will agree that there isn’t a perfect time to have a child. Even if you feel like you have all your finances sorted, you will still need to do some maneuvering with your money in order to make it work. For some, this might include having a large yard sale in order to make room in your home and earn a little cash as well. For others, this may mean selling a vehicle or home in order to have more cushion during the crucial first years. Before you can start making moves like those, you need to assess the value of your possessions, including your home’s worth. With this knowledge, you can have a better idea if one parent can afford to stay home with the baby for a few years or if you can afford to move into a better neighborhood.
Rethink Your Budget
If you’ve gotten by without keeping a stringent budget, now is the time to make changes. Childcare comes with a long list of new expenses that you’ve never dealt with before. The money has to come from somewhere, and when you’re still balancing mortgages and monthly bills, you will need to figure out a way to stay out of the red. Go through your current budget and cut expenses wherever you can. If you are still running tight, you might even consider picking up a part-time job to help give your family a little cushion.
Know Your Financial Options
If you’re starting to feel a little bit anxious about the prospect of financing a family, don’t worry, there are a lot of perks that come with being a parent which will help you manage. For starters, having a dependent in your household means an automatic deduction from your taxes, but the perks don’t stop there. You can even be eligible for a Child Tax Credit, which can be worth up to $1,000 per child. When you’re starting out, every little bit helps.
Consider Life Insurance
When you have a child, you want to ensure that every aspect of their lives is covered. Although parents don’t like to think about not being there to love and support their kids, it’s important to plan ahead to ensure that they’ll be safe and secure in the event of a tragedy. If you haven’t done so already, now’s the time to seriously start searching for a good life insurance policy, one that will provide financial protection for your family.
After choosing between term and whole life insurance, the insurance company will want to have a thorough look at your overall health, which includes the much-dreaded blood test. And while this part of the process isn’t something many people look forward to, the blood test can help determine your monthly rates by assessing your blood pressure, glucose and cholesterol levels, and your history of tobacco use. This information, as well the length of term and the coverage amount, will determine how much you’ll end up paying for your policy.
Start Saving Where You Can
A lot of parents feel a lot of pressure to start saving now for their kids’ future. While it is a good idea to invest in your child’s future education, you shouldn’t put aside too much money too soon. Make sure you have enough to provide for your whole family before locking up your money in the bank. Once you start having extra money at the end of each month, start setting the leftovers into college or emergency funds to help you out down the road.
Now that you have your whole world nestled in your arms, you realize that life is bigger than just you. You know that no matter what the future may hold, you’ll do everything you can to keep your child safe, sheltered, and happy. Taking these steps now may seem like a distraction from one of life’s biggest moments, but you know that for the world in your hands, it’s worth it.
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