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Starting a family is perhaps one of the most monumental steps that you’ll take over the course of your adult life. Although this period of time will be accompanied by a lot of excitement, it’s also perfectly normal to feel overwhelmed. Alongside giving into your nesting instincts, the arrival of a new baby into your family can also trigger some serious financial concerns for new parents.
Thankfully, there are measures you can take to help you and your family stay perfectly afloat with budgeting and spending as you navigate the many routines and responsibilities of young parenthood. Here are 7 super helpful tips to follow when managing family finances as new parents.
1. Revisit your insurance policies
The first thing you’ll want to do is add your new dependent to your family’s health insurance plan. But the assessment of your insurance doesn’t just stop there. If you’re moving into a bigger home to make space for your growing family, then you should also be sure to secure yourself a home insurance quote for your larger property.
The birth of your first child is also a common trigger for many to consider securing life insurance or even income protection insurance for the first time. After all, having mouths to feed aside from your own can bring a lot more purpose (and perhaps even a little anxiety) to your working life. By setting some time aside to research insurance policies, however, you can be rest assured that you’ve equipped your family with all the most suitable plans to keep you covered in the event of any unforeseen financial circumstances.
2. Claim your family tax benefit
Depending on where you live, you may be entitled to receive some government concessions to help support your family financially following the birth of a child. You’d be surprised by just how valuable family tax benefits can be for new parents in particular, especially if they may be acclimating to becoming a single-income household. This is why all new parents should use their parental leave period to finalize all tax claims and perhaps even schedule a meeting with an account to help take a lot of the guesswork out of your first tax return with dependents.
It’s also common for specialized family tax benefits to be made available for families who fall below income thresholds, have kids in childcare, or are single-parent households. With so many potential benefits that you could be eligible for, it certainly does pay to do your research and set aside some time to place claims for any and all government concessions and benefits that your family may be entitled to.
3. Budget for your baby
Having a baby can often get more expensive than you may expect it to be. Not only do you have to factor in the costs associated with pregnancy and birth, but you also have to consider infant care as well baby products and supplies.
With all these new expenses to carry, the costs of having a baby can really start to add up. This is why many new parents rely on their family and wider social networks wherever possible. New parents should feel encouraged to source second-hand infant clothing from friends and loved ones. This can be a fantastic way to save a ton of money, as newborns tend to grow far too quickly to justify buying your baby an entire wardrobe from the get-go.
New parents should also ensure that they have a selection of babysitters to choose from. Ask your parents, your in-laws, aunts and uncles, and even your other friends with kids if they wouldn’t mind being on a contact list just in case you ever need a little extra support. And try to return the favor or even express your gratitude wherever you can as well!
4. Start saving for the future
With all the chaos of early parenthood, it can be all too easy to forget that there will be a time in the very near future where the little baby that’s finally soundly sleeping in your arms, will be heading out on their first day of school, their first band performance, their first graduation, their first trip abroad, and all the other big milestones that accompany a life well-lived. Of course, it’s imperative that parents plan for this eventual future just as they plan for bath time after a long, hard day of playing peekaboo, walking with your stroller, and spoon-feeding mushy peas.
But how do you even start thinking about planning for a whole expansive future with all the everyday tasks and trials that accompany new parenthood? A good place to begin is by amending your household budgeting. Try to save at least 10% of your total income every month as a good baseline. Investing in stocks can also help generate some extra income for your household, though be sure to do so with the utmost care, just to ensure that your investments stay well-informed.
On top of this, it’s a good rule of thumb to set up separate savings accounts for future circumstances, such as retirement and the education of your children as they grow up. Selecting high-interest savings accounts can help families passively reach savings goals, meaning you’ll have more time and energy to focus on raising your children rather than worrying about money.
5. Set up an emergency bank account
Speaking of setting up savings accounts to reach your savings goals, it’s important to note that even families with the most ironclad budgets can still find themselves tackling unforeseen situations such as home repairs, car breakdowns, or sudden illnesses. And the last thing that you want to do when addressing situations like this is eating into your retirement savings account.
This is why more and more families are opting to set up an additional bank account that’s designed to act as an emergency fund. The amount that you place into your emergency fund every week should ideally be calculated with regard to the size of your family. For instance, families with multiple children and maybe even one or two pets, should aim for a minimum of $5000 to start with in order to cover any unexpected vet care or healthcare bills. You can add a certain percentage of your monthly income into the account as you go. This figure will likely differ from family to family, so we simply recommend that you do what may be best for your household.
Your emergency bank account should also ideally be a savings account, just to help your family finances feel extra padded out if you ever need to take advantage of these funds.
6. Pay your bills as they come in
Although it can be tempting to leave making your bill payments to the last possible minute, doing so can often lead to families failing to reach due dates and potentially even racking up additional late fees. For this reason, it’s essential that you get into the habit of paying your bills as soon as they filter in.
Young parents are also encouraged to use bill estimates to help outline their household budget, just to give themselves the best possible chance of having enough money in their budget every month to pay all their bills in a timely manner. If for any reason you find yourself short one month, then you can absolutely use your emergency savings to pay the remainder of that bill. Doing so would be preferable to waiting till your next payday. And this is what your emergency fund is for, after all.
7. Start writing up your will
Finally, writing up a will is also a common concern for many new parents, as the addition of a newborn into the family can raise some questions surrounding you and your partner’s legacy. Writing up a will can help ensure that your kids and other family members can maintain access to your assets in the event of your untimely death. If your kids are under the age of eighteen at the time of you or your partner’s passing, preparing a will can also help provide your children with financial structure, as well as outline steps that your loved ones (like your children’s godparents) can take when distributing your assets or accessing your family trust.
Keep in mind that the definition of what constitutes a ‘legally valid’ will can differ depending on your state or federal laws. Because of this, you should absolutely seek legal assistance when writing up and finalising your will, just to ensure that your will is legitimate and that your family’s assets are protected in the event of your or your partner’s passing.
With these money management tips in place, new parents can ensure that the continuing growth of their family is supported by a strong and sturdy foundation. Be sure to consider all 7 of the tips we’ve outlined above when organising your family’s finances, whether you’re anticipating the arrival of a new baby or already have your hands full with a newborn at home.
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This content is brought to you by Hubert Dwight.
Photo by Andre Taissin on Unsplash
