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Prepping for parenthood: Savings, insurance and wills—oh my!
If you've been shopping for strollers, cribs and clothes for your infant, you've already got an inkling that having a baby is going to put a dent in your wallet. In addition to being the light of your life, babies are expensive.
Now is a good time to take stock of your finances, with an eye toward adding a new dependent to the mix. What can you do now to help prepare for your growing family's financial future?
- Review your health insurance. Find out how to add a new person to your coverage. Is your premium going to rise because you have a new dependent? If you have a partner and you have separate insurance plans through your employers, compare costs to see if you're financially better off covering your child under one plan versus the other.
- Budget for child care. Quality child care can cost a lot of money. Review—or create—a household budget to figure out how you can pay for child care services. Or, if you or your partner plan to stay home after the baby's born, review your finances to make sure you can live on one income.
- Create a college fund. It's never too early to start saving for your child's education. You might want to open a separate savings account at your bank. Or consider opening a 529 college savings plan. This is a tax-advantaged investment account you can use for future education expenses—a sort of health savings account for college. (Keep in mind that a 529 account could lose value over time, so read the account's fine print carefully.)
- Get life insurance. You may already have a life insurance policy. But if not, having a baby is certainly a good reason to get one. It can give you the peace of mind of knowing your loved ones will be taken care of financially if something unanticipated happens. You can buy life insurance on your own and, oftentimes, through your employer.
- Make a will. Like life insurance, having a will can ensure that your family is taken care of in case of your death. If you and your partner both have wills, discuss whom you'd want to take care of your child should both of you pass away unexpectedly.
- Set up a baby savings account. You can start putting money into this account now. Use it to pay for some of the pricier baby items, like car seats, strollers and beds. You might consider linking it to your checking account with an automatic transfer of $25, $50 or $100 each month into the baby's account.
Another way to save
Making a gift registry for your baby shower can help you save money. Here's some good advice about what to include in your gift registry.