5 Smart Legal and Financial Tips for New Parents
There are the obviously fun things to do when you’re waiting for baby, like setting up a nursery, checking out baby gear, and shopping for adorable onesies. But did you know that there are some legal and financial things you should be thinking about too? From prepping for the worst to planning for the best, here’s what to keep in mind as you step into your new role as a parent.
1. Purchase life insurance. It’s not exactly a happy thing to think about, but it’s important to consider what will happen to your family, financially speaking, if you die. Will your kids be able to go to daycare, participate in sports, the arts, and other activities, or afford college? Will your partner be able to keep up with all of the living expenses and debt with only one income? According to financial site NerdWallet, life insurance can give your family financial security in the event that something happens to you.
2. Automate your savings. If you’ve been meaning to set aside some money before the baby is born but can’t resist splurging a little here and there, then it’s time to outsmart yourself. Set up a direct deposit to automatically draft a set amount of money from each paycheck (or from your checking account) each month. Your savings can start or add to an existing emergency fund. The extra stash of cash will also help in creating your own sense of financial security. With money set aside, you can enter the brave new world of parenting knowing that you have enough to afford time off once the baby is born — or to fund an unexpected expense on top of paying for childcare, diapers, and everything else a baby needs.
3. Create an estate plan and choose a guardian. If you and your partner are no longer able to take care of your children, it’s important to legally identify who will become their guardian and how you want your assets managed. You can do this by creating a simple will with a lawyer who specializes in estate planning or through a self-serve living trust and estate planning site like Everplans or LegalZoom. It’s not an easy thing to think about, but having a plan in place will give you peace of mind.
4. Pay down debt. If you have debt, you already know the drag it puts on your finances. Add a baby to the mix, and it’s easy to feel your money pulling away from you even faster. Get a handle on your debt by creating a budget and sticking to it. If you need a little boost, there are some great apps that can help you, including Mint, YNAB (You Need a Budget), and Wally.
5. Set up savings for your child. Whether it’s planning for education costs or simply creating a nest egg for your little one, the easiest way to start saving for your baby’s future is to open up a simple, no-fee savings account with your bank. You can start stashing money away from each paycheck with amounts as big or small as you can afford. Even as little as $40 a month can build into a good chunk of change before your baby even knows what a dollar is. If a college education is the most important savings goal, consider a 529 plan. This type of investment account offers tax benefits and a dedicated way to provide for your future graduate.
Do you have any good legal or financial tips for new parents? Share them with us @BritandCo!
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