Financial issues sometimes do not get enough attention, but this can be especially true in the case of preparing for a new baby. Preparing for a new baby is a fun, yet frantic time. There are a million things you need to think about and how your finances are going to change are one of them. Below are four steps you should take to make sure you and your family are financially ready for your new baby.
What You Need to Know
1) Make a Will
While many new parents don’t want to think about it, one of the most important considerations when having a new baby is what would happen if you weren’t there. Drafting a will can ensure that your new addition would be properly cared for if something were to happen to your or your partner.
2) Get Insured
Life insurance, critical illness insurance, and disability insurance can all provide you with the financial protection that you and your new family will need if something were too happen to you or your partner. Raising a child is expensive and will be even more so if a parent were to die or become sick unexpectedly. It can be hard to make a financial commitment to a hypothetical event but having this peace of mind in place now will be blessing if something were to happen in the future.
3) Draft a Budget
Babies are expensive! It’s a good idea to re-evaluate your finances well in advance of the baby’s arrival. You will need to plan for a possible reduced income while on maternity/paternity leave and you will find yourself with a whole extra set of financial obligations. Diapers, formula, clothing, and child care are all expenses new parents need to prepare themselves for. See where you can cut back without sacrificing your current savings and retirement plans.
4) Start an Education Fund
The sooner you start saving for your child’s expenses the better. Take advantage of the Registered Education Saving Plans (RESP) offered by the government. These plans allow you to contribute money into investment plan and have it grow tax free. The government will even match a portion of your contribution to help you save even more.
The Bottom Line
There is a lot to think about before a new baby arrives but making a financial plan in advance will give you more time to spend enjoying your new addition and will reduce the stress of the new financial commitments you will have.