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