Having a new baby is an exciting event. There are new roles and responsibilities that come with being a first-time parent. Some of the major changes are financial in nature. Here are some financial moves that all new parents should consider.
Add Your Child To Your Health Insurance
Paying for health care can be a very expensive proposition. Insurance can also be expensive, but it does give a layer of protection against catastrophic or chronic illness. Most insurance policies require that parents add their children within a few weeks of birth. Failure to do so could leave your little one without coverage should something happen.
Rethink Life Insurance
Most adults can find a way to at least survive should a spouse pass on unexpectedly. This is not the same for children. Additionally, having a child can make it more difficult for the surviving spouse. Having a new child in the family is a perfect time to evaluate your life insurance situation. Term policies will generally provide a greater death benefit for lower premiums than a whole life policy will. Many experts recommend at least 10 times your annual salary as a suitable level of life insurance coverage.
Those who might have been hesitant to start budgeting will likely do well to start the process when they have a new kid. The arrival of a baby can provide the perfect time to look at the family budget. Are there unnecessary expenses that can be cut? If so, they should be cut. A new kid in the family will mean additional expenses in areas that were not necessary before children. These expenses include things like diapers, childcare and baby food.
Save For College
The cost of higher education has gone up more than the general rate of inflation for years. The government allows parents to save for college with pre-tax dollars. This gives parents the perfect option for helping their kids pay for college. Getting an early start toward saving for college is a good move because it allows more time for compounding to work its magic.
Take Advantage Of Tax Credits
Kids come with costs, but they also come with tax advantages. Most parents will see a $2,000 tax credit for each child they have as per the tax reform bill that passed in late 2017. These credits can offset some of the additional expenses that come with raising a child.