12 Feb New Mom, New Financial Plans
New additions to your family mean new joy and milestones, but also new obligations and responsibilities. Becoming a new mom changes the way you look at many things, including your finances. You don’t have to stress, though. We’ve pulled together some tips to help you manage your finances as a new mom.
Parental Leave and Child Care
How will your financial picture take shape with the added obligations of a baby? Start by considering some scenarios to show future costs and benefits of your situation, including continuing to work, a one-person income versus two, and staying home. You’ll also want to research your employer’s policy on parental leave, both maternal and paternal. If your company don’t offer paid leave, find out if you can use sick or vacation days. Also consider building an emergency fund before the baby arrives.
If the best decision for you is to continue working, child care is also an expense that must be planned for. Child Care Aware shows the average annual cost of infant daycare is close to $1,000 per month and can be twice that amount in certain areas, with in-home child care potentially costing much more.
Insurance – Health and Life
Check your current health plan so you know exactly what your coverage is and the costs associated with making any changes. You’ll need to understand the health care costs of your pregnancy, the birth, and aftercare, how much your policy covers, and what you might be responsible for out-of-pocket.
A Dependent Care Flexible Spending Account can help save money on the health care costs for your new baby, and a Health Savings Account (HSA) might be able to help you cover some of your medical bills. Don’t forget to put your baby on your main health insurance plan within 30 days of birth.
Life insurance is another cost to consider for the long term well-being of your new family. Coverage amount varies, but consider long-term cost of raising the child, care, college, expenses, debt, and potential lost wages. Be sure to consider policies offered by employers and individually purchased policies to see which is less expensive and more easily customized. A standard method for choosing coverage can be equal to 8 to 12 times your income.
If you haven’t made plans already, a new baby is an excellent reason to create a will and prepare estate documents. According to Caring.com, only 36 percent of parents with children under age 18 had completed any of the appropriate planning. It’s important to name a guardian in a clear and legally-enforceable manner, as is naming an executor. Also consider creating a trust to control assets until your child is able to properly manage your estate and money.
A baby born in 2017 faces an approximate cost of $110,000 per year of college. Wow! And that’s for an in-state public university, covering only tuition and fees. You have some options, including a 529 college savings plan or another investment and savings account, and start making automatic monthly contributions. A strong financial plan will help establish how much to put aside per month to reach a goal, such as four years of tuition and perhaps room and board at an average-priced private school.
According the 2015 USDA report Expenditures on Children by Families, families spend about $12,600 annually during the first two years of the child’s life alone. Putting together a manageable financial plan with a professional advisor can help achieve all your long-term financial goals.
You don’t have to do all of this planning alone. You don’t even have to remember everything on your own! That’s what the Hopman Group is here for. Give us a call and let us show you how we can help.