As a new parent, you have so much to think about in addition to having experiences you haven’t had before. It can be very overwhelming. You may have considered the cost of having a child and the increase in your regular expenses with your growing family. But you may not have considered updating your financial strategy and reprioritizing how you spend and save your income. Here are five tips every parent should know.
Add Your Dependent to Your Health Insurance
With the excitement of bringing your child home from the hospital, adding your baby to your health insurance plan may have gone overlooked. Due to this qualifying event (adding a dependent to your family), you have a time period to add your little one to your insurance plan. Plans can require that you add your baby within a certain timeframe, and if you do so, your child should be covered retroactively and going forward – meaning that anything that happened between their birth and the enrollment date should be covered.
Save More for Emergencies
Now that your family is growing, there are more possibilities of emergencies happening. You have more people to take care of financially, and you may need to increase what you have saved in your emergency fund. As your dependents and monthly expenses grow, so should your emergency fund.
Know Which Tax Breaks to Take Advantage Of
When you add a dependent to your family, you could be eligible for tax breaks you may not have known about before. Or if this new addition to your family helps you meet specific criteria, you could apply for different tax credits than you may not have been eligible for in the past.
Update Your Financial Documents
As with most significant life changes, you might consider updating your will and estate plan and any documents that require your beneficiaries’ information. These updates are especially important now that you have a new dependent. This information can allow you to indicate who you would like to serve as your child's guardian should something happen to you and who should be the beneficiary of any life insurance policies or estate plans. Documents to update can include wills, trusts, power of attorneys and beneficiary designations.
Begin Saving for College
Even if it seems like college for your little one is years away, it may be here before you know it. Let the power of compounding work for you by investing now. You have 18 years before college, and small amounts invested over time will help college seem in reach. Starting to save for college now can allow you to take advantage of tax-advantaged programs like a 529 account. Provide for your kid’s future and begin saving for college before they start preschool.
If you need help identifying the right college saving strategy for you, contact the office.
This piece is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
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Five Financial Tips for New Parents
October 26, 2022