Becoming a parent is by far one of the most difficult and life-changing events that many people would experience. As a parent, you are not only responsible for yourself but also responsible for another person who depends on you for everything. At a stage like this, having good financial assets is extremely important. From the time your baby comes into this world, you are bound to spend money like water since everything revolves around it- from paying hospital bills to getting essentials like food, diapers, and medicines. Your expenditures are bound to increase with your child’s age until they become adults themselves. Therefore, every parent needs to think about their finances from the time they are expecting to ensure a healthy and financially stable future.
Here are some of the financial moves every parent must make.
Get Health Insurance for your Child
As soon as your newborn arrives in this world, the first and foremost thing you must do is to get health insurance for them. You should contact your insurance agency and tell them about your newborn so that they can add their name to your health insurance plan.
Many people often forget to do this simple task since they think that the insurance company would automatically know about their baby’s delivery and include them in the insurance plan. However, it does not work like that and it is necessary for you to officially tell them about your newborn’s arrival. Most plans require that your child is added within 30 to 60 days post-delivery. If this is done within the time frame, your child would be covered by the insurance company automatically, and often, all the expenses that occur between birth and enrollment would be covered by insurance itself.
Explore Extra Income Options
As a parent, you would require more money than before, and thus, you must look out for extra earning options. Many parents rely on credit cards to pay for things. However, this is not a smart move since the credit interest debt piles up, making it harder for you to pay. You can look at different options like getting a reverse mortgage if you are eligible for it. You must note that there are reverse mortgage pros and cons and understand them thoroughly before diving into it.
Even though it provides you with income in exchange for your illiquid asset such as your home without you selling it, however, the interest rate on it is often higher than on a home equity line of credit.
Make a Family Budget
You should keep a close eye on your finances and the best way to do this is by making a family budget. You must note down your earnings and expenses and ensure that your expenses never outrun your income. You can divide your expenses into different categories such as rent, insurance, utilities, education, etc., and allocate different amounts of money for each category. This way you would have full control over what and where you spend and it would also prevent you from spending extra amounts on unnecessary items since many people go overboard while shopping for their newborn out of excitement.
Save For Your Child’s Education
Education in these times is not cheap at all. When your child is just a baby, you do not think about its higher education and focus only on what is needed at that time. However, if you do not start thinking about your child’s college tuition right from an early age, it would be extremely burdening for you to send them to college, putting them in debt of student loans. Therefore, you must take out some amount of money from your income every month and start saving for your child’s college fees from the start.
Prepare for The Worst
No one knows what life brings them ahead, therefore, it is best if you think about your child’s future and prepare even for the worst. Assign a trustworthy person to be your child’s guardian in case of your absence. Get life insurance which would help your child get through at least till the age of 18 in case something happens to you or your partner. You must also have a will to ensure that your assets are legally given to your child and that they do not face any problems even if any worse scenarios ever occur.
As exciting and cheerful as it may be to welcome your newborn, many parents are extremely afraid and financially stressed to experience this change. However, if you start planning for the future and go through means to help you get financially secured from an early time, you would not face any problems and would be able to raise your child smoothly.