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Thinking about expanding a family is a time of anticipation, joy, and change—including financial change, with plenty of new expenses to think about. The following tips can help parents get their financial ducks in a row and prepare for their newest family member.
Estimating all the new expenses that come with expanding a family can be challenging simply because there are so many to think through. Parents can brainstorm a list of large and small expenses that can potentially surface, from visits to the pediatrician to baby-proofing a home. Researching an approximate dollar amount for each item on the list will help parents build a rough budget and begin to wrap their minds around some of the costs.
An emergency fund can be extra-important for new parents—a new dependent creates new possibilities for unexpected expenses. Prospective parents might want to check in on their savings accounts. How much is in there right now? It’s typically a good idea to have about six months’ worth of expenses saved.
Expanding a family means looking out for that family in the years to come. New parents might take proactive steps now, like finding ways to prioritize new expenses over things that won’t mean as much anymore, paying down credit card debt, and building up their savings. Many new parents get life insurance to provide their dependents with financial security if the parent passes away unexpectedly. Depending on their budget and preferences, parents might opt for a permanent policy like whole life insurance, which offers a guaranteed death benefit and cash value that builds over time, among other features.
It’s vital to think through the finer points of parental leave as far in advance as possible. Since leave policies differ from employer to employer, it’s key to research, ask questions, and map out a plan for taking time away. Don’t leave this piece of the puzzle until last; parents need their leave time to readjust and look after themselves as much as they need it to care for their newest family member.
Paying for childcare is one of the most significant, if not the most significant, expenses for new parents. Consider all the available options before making a decision, including daycare, a shared nanny or babysitter, and afterschool programs. Talk to family, friends, and other parents in the community—they may have great recommendations or be open to coming together and pooling their resources.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries in Milwaukee, WI.
Source: Northwestern Mutual
Contact: Don Klein, 1-800-323-7033
