Becoming a parent is truly a joyful experience. Unfortunately, that won’t make it a cheap one. When a new baby arrives, your expenses are guaranteed to rise. However, most new parents don’t expect the costs to grow quite so high. Between diapers, strollers, and any other baby gear, your finances will surely hurt. When embarking on this new adventure, preparation is crucial. Both before the little one arrives and in the months after, you must be ready for any financial changes. With that in mind, here are ten money moves that every new parent should make.
1. Live Below Your Means
Any new child will bring new expenses with them. Baby clothes, diapers, and food are just a few costs you’ll have to contend with. Overspending will make these expenses even harder to handle, putting pressure on your finances. Because of this, you should rework your monthly budget to lower household costs. Rather than waste money on non-essential purchases, like meals out, you must live below your means. This will free up money for baby-related costs.
2. Claim Any Child Benefits
Everyone knows that parenthood is difficult, even the government. That is why there are certain benefits you can claim once you have a child. Having a baby makes you eligible for tax credits that many people aren’t aware of. The amount of that child tax credit will depend on your income, filing status, and number of eligible children. Make sure you also look into any other benefits you might be entitled to, such as maternity pay. Paternity pay is an option for many new dads too.
3. Start Saving For School
Education is important but doesn’t come for free, especially these days. If your children were to attend college when they’re older, they would have some huge bills to pay. Although they could apply for student loans, these don’t always cover all living costs. Regardless, your children would be in serious debt as a result, which is why many parents lend a hand. Anyone planning to do so should start saving for school now. The longer you put money away, the more help you can offer.
4. Write Out Your Will
When we pass away, any belongings must be transferred to our heirs. Although many people assume that these automatically go to those we wanted them to, that doesn’t always happen. To make sure that your wishes are fulfilled, you should work with a probate attorney. They will make the probate process as cost-efficient and seamless as possible. Having children means having to decide who would take care of them if you passed on. This must also be included in the will.
5. Pay Off Any Debt
No one wants to leave debt behind when they pass away. While this isn’t inherited by your children, as many people expect, it could cause problems for them. Having growing piles of debt will also limit your ability to save and put your finances at risk. Because of this, you must pay off your debts while you still can. Starting by clearing any balances with high-interest rates will make the process cheaper. However, if you need motivation, then the snowball method is effective.
6. Buy The Right Insurance
Everyone needs insurance, particularly parents. If anything were to happen to your home, car, or health, it would cause huge problems for your family, along with unexpected costs. Having protection will avoid all that hassle. For this reason, you must go through your assets and make sure that they are covered by great policies. Insurance can be a tricky subject, so you may want to speak to an expert. With their help, you can ensure that anything important is well protected.
7. Make A Retirement Plan
Retirement might feel like a long way away, but you shouldn’t ignore it. With so many things to remember about your child, forgetting about yourself is easy. Nonetheless, as they explain on a plane, you must help yourself before helping others, By prioritizing your retirement now, you prepare for the future. This reduces the likelihood of your child having to support you as you grow older. There are many retirement plans to consider, so research the different options available.
8. Grow An Emergency Fund
Although insurance will cover many different assets, no policy can protect you from all unexpected costs. That is why you must grow an emergency fund too. Without emergency savings, you might have to borrow to cover sudden expenses, which would put you back into debt. Many people rely on an emergency fund when they lose their job unexpectedly. Because it can take months to find new employment, you should save around six month’s worth of costs.
9. Earn A Second Income
Financial troubles aren’t always the result of overspending. A lack of income can also cause problems. Although an emergency fund could cover you for some time, having a job to fall back on would offer peace of mind too. Thankfully, there are many ways to earn a second income. While some people become entrepreneurs, others work part-time in bars and restaurants. Whatever job you choose, you can use the money to protect your financial present and future.
10. Speak To One Another
Money is a topic known to cause problems within relationships. If you and your partner don’t agree on financial matters, it can affect family life, along with your finances. For a healthier bank balance and relationship, you must discuss money calmly. Only with cooperation can you achieve a better financial future for yourselves and your children. When you don’t agree on certain money matters, you must work through the issue and come to a compromise together.
Nothing will change your life like becoming a parent does. Rather than being responsible for only yourself, you suddenly have an entire other person depending on you. Children are amazing, but expensive creatures. To protect your finances, you must prepare them. Hopefully, with the advice above, you can make a better financial future for your family.
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