In the wake of the birth of Prince George, the world is buzzing over everything baby. In honor of the royal baby, we are offering advice for new or soon-to-be-parents on financial planning and preparation for the new addition to your family. Your head can spin from the learning curve associated with adding a new member to the family, but there are some steps you can take in order to ensure that you are fiscally prepared.
A 2011 Department of Agriculture report found the cost of raising a child to age 17 to be nearly $235,000. The Wall Street Journal estimates the cost to be closer to $1.5 million. Whatever your personal estimate may be, planning for the future of your family is absolutely vital.Maternity Leave: Once you have figured out your companyâ€™s parental leave policy, start thinking about how much time you want to take off and how youâ€™ll pay for it. A substantial chunk of your maternity leave may be unpaid so before the baby arrives it can be useful to transfer money into sub accounts designated for â€œday careâ€ or â€œbaby leaveâ€.
- Health Insurance: You only have 30 days after the birth of the child to determine whose policy you would like to add your baby to, so it is important to make this decision before the baby arrives.
- Education Savings: Begin saving in your own account before the arrival of the baby, and then set up a 529 account once the baby is born in order to set aside money for their education. Make sure that saving for your childâ€™s education doesnâ€™t completely derail your retirement savings plan. It is much easier for your child to make up the difference through grants, scholarships, and student loans than it is for you to account for the lack of money in your retirement fund.
- Estate Planning: Be sure to designate a legal guardian and financial trustee for your baby. Name your children as contingent beneficiaries so that if both parents pass, this will ensure that the accounts transfer to your kids.
- Homeownerâ€™s Insurance: If you carry homeownerâ€™s insurance update the policy to cover any changes you made for the arrival of the child upwards of $5,000 dollars. For instance, the renovation of Prince Georgeâ€™s nursery cost about $1.5 million.
- Life Insurance: If complications arise during pregnancy is could be harder to get a comprehensive life insurance plan. Get a life insurance plan early on in order to avoid this hurdle. Many financial experts also recommend term life insurance because term insurance is cheaper than whole life and pays out the face amount of the policy.
While you canâ€™t predict the future, your financial preparedness can protect the newest addition to your family from the unknown. Your bundle of joy may not be in line for the throne, but he still deserves the royal treatment. Wishing you an excellent weekend from SelectQuote!