5 Money Moves to Make for Your New Baby

Money Moves to Make When You Have a Baby

Make your money moves, baby!

Did you recently have a baby?

A lot of my friends recently had or are about to have a new baby.

I thought it would be helpful to list out some money moves you should likely make when you welcome a new baby into the world.

Open a Savings Account – As soon as you get your child’s social security number, you can open up a savings account in their name. Use this account to stash extra cash you want them to have for whatever reason. It’s simple to open up an online savings account these days.

Start a 529 College Savings Plan Contribution – Parents are often confused by this topic and do nothing until it’s too late. It’s really easy to start a 529 college savings plan and start making automatic contributions.

Set this up now and you’ll be way ahead of most parents when it comes to providing your kids with a decent start at affording college. Bonus tip: If you are still expecting, open the 529 plan using your social security number. Then change the beneficiary once your child is born.

Consider a Flexible Spending Account (FSA) – Out-of-pocket medical expenses will likely go up for your family. Now may be a good time to open a FSA, which would allow you to use tax-free dollars to pay for those expenses that insurance won’t cover. If you already have one, contact your employer to increase your FSA contributions.

While you’re at it, make sure you add your baby to your health insurance coverage. Read more about tax-advantaged medical savings accounts.

Get or Increase Life Insurance – Now that you have someone dependent on your income, you should likely insure that source of income by getting a term life insurance policy.

For most parents it makes sense to get a term life policy over a 20-30 year period. If you already has life insurance, review your policy and ensure it still meets your needs.

Create a Will – Finally, every new parent should create a will. I’ll be honest, Mrs. PT and I haven’t done this yet. But we really need to. A will not only establishes where your financial assets go if you die, but it determines who gets to take care of your child if you die.

The folks at babycenter.com put together a great guide detailing why every parent needs a will.

What are some other money tips you have for new parents?

photo by Raphael Goetter



Last Edited: February 14, 2012 @ 12:30 pm The content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka "PT", is a CPA, financial writer, FinCon CEO, and husband and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

Comments

  1. Great tips! I’d aldo recommend conducting a benefits check-up. Call your insurance company before the baby arrives and find out how much they will pay for the delivery, as well as postpartum care for mom and baby. Don’t be caught by surprise when the medical bills start showing up!

  2. Great tips! I’d also recommend that new parents be realistic when shopping for baby products for their new baby.

    While you want to give baby the best, it may be wise to look for gently used items at thrift stores and consignment shops, since most baby necessities are costly and only used for a short period of time. When it comes time for the baby shower, ask your hostess to let people know of the things that you need, so you don’t end up with 30 adorable outfits and no thermometer. You may also check with friends, relatives, and neighbors with children to see if they have any hand-me-down baby products and baby clothing.

  3. Don’t spend too much (or any) on baby clothes. Most of your relatives and in-laws LOVE to buy gifts for the newborn, and this almost always means clothes. As the parent of a new one-year-old, I’ve been amazed to see how our new daughter ended up with a wardrobe bigger than mine in a matter of weeks!

  4. Rich with SFP says:

    Very good insight! I have daughter who is soon to have their first child and I will be forwarding this to her. Thanks