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Baby-Proofing Your Finances

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So, you're going to be a parent. Exciting? Yes. Scary? Certainly. While finances may seem to be a daunting part of your new, more fiscally responsible life, this is just the beginning of navigating all that having a child brings. No doubt, you want to be debt-free with a solid retirement plan in place and the ability to take care of college costs. Don't be afraid to ask for help from a professional to put a plan in place designed to reach your goals—the best way to overcome fear is to acknowledge concerns and make a plan to address them.

The first year of baby's life is hectic—checkups, first smile, first teeth, first steps—so it's a good idea to get as much done as soon as you can. As time goes by, and your to-do list is checked off, you'll thank yourself for baby-proofing your finances.

MAKING THE DECISION TO HAVE A BABY 

Pay down debt and save. Strive for a cushion of three to six months' worth of living expenses.

Prepare your post-baby budget. This can include everything from a larger home or safer car to anticipating new costs such as baby supplies, and unplanned or uncovered prenatal through delivery expenses.

Check your benefits. Look at paid and unpaid maternity and paternity leave options available to you. Fill out the FMLA paperwork as soon as you know the estimated dates of leave and return.

Get savvy about insurance. Review the life insurance offered by your employer, then consider supplementing it with a term or whole life policy. Disability insurance is also a good idea.

Consider additional needs. For couples who want to legally adopt their partner's birth child, there are significant costs and other necessities to plan for such as having a domestic partnership in place.

USING THOSE NINE MONTHS WISELY 

Explore child care options. Investigate what you're comfortable with as well as what you can afford. Can a family member care for the baby while you work, or can you share a nanny with another couple?

Plan for the unthinkable. Work with your financial advisor and qualfied estate attorney to make sure your will is updated and all your bases are covered; this includes naming a legal guardian(s) in the event something happens to you or your partner.

Get real about the gear. Talk to other parents to see what you need. Save money (and the environment) by buying some things secondhand, but always do your research and check for recalls.

Practice new ways of spending. Put your post-baby budget into action as soon as possible to help ensure you're on track when baby arrives.

PLANNING WITH BABY AT YOUR SIDE 

Plan for your child's financial future. But don't lose sight of your own. It's important to save for your retirement first. Consider a 529 savings plan, Coverdell Education Savings Account or other educational savings plans, and deposit cash gifts.

Add baby to your plans. As soon as possible after birth, you should update any necessary beneficiary information in a current estate plan, wills, and health or dependent care documents.

Consider a trust. Setting one up allows you to determine how your assets should be managed and distributed to your beneficiaries.

Continue to track your spending. Stay ahead of any potential concerns and keep that emergency fund intact for true emergencies.

Enjoy the tax break. Before you can claim your new dependent, your child needs a Social Security number. Make it easy by applying during the birth certificate process at the hospital.

Article provided by Melissa Stewart, CFP®, AIF®, Financial Advisor at Blueway Financial Partners of Raymond James.

The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. Material prepared by Raymond James for use by its financial advisors. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. 2060 East Paris Ave SE, Grand Rapids, MI, 49546. Phone: 616-974-3370

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