Day 30: GOBankingRates wants to help you Live Richer. Throughout the month of July, we’ll be sharing daily tips for how you can do just that, with advice on budgeting, saving, investing, making the most of your career and managing debt — plus money advice for every phase of your life. Check back each day during our 31 Days of Living Richer to learn everything you need to know to set yourself up for financial success and live the richest life possible.
Being a new parent is exciting, stressful, joyful — and expensive. You now have another person you’re responsible for in all senses of the word, including financially. Living Richer in this phase of life means doing everything you can to ensure you’ll be able to give your child safety and security, and smart planning will ensure you can do just that.
Here are a few ways new parents can Live Richer.
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Plan Ahead for Short- and Long-Term Costs
“You should definitely anticipate expenses for things that the child needs such as diapers and potentially formula, but other expenses that you need to take into consideration are potential healthcare costs,” said Morgan Kennedy, a private client advisor at Bank of America Private Bank. “You need to update your health benefits and check out how much the family plan increases your expenses and add that into your financial budget.”
Go Back to Day 26: How To Live Richer in Your 30s
You should also start planning for longer-term costs.
“When I meet with clients who are expecting or have children who are expecting, the first thing I tell them is that it’s never too early to start a college savings plan or educational plan for your child,” Kennedy said. “Eighteen years go by really quickly and college expenses are ever-increasing, so try to start setting aside some [money]. Whether it’s a bi-monthly draft from your checking account or you put bonuses into the plan, put that money aside for your child’s college fund.”
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Reevaluate Your Budget
“For any couple, having a budget is always something that’s important,” Kennedy said. “This will help them when it comes to seeing what you can potentially cut out so you can add to your savings. Something as simple as just writing down what you’re spending every two weeks and then sorting it out into categories will help give you a window into your spending, and then you can talk to your spouse, your partner, your family about where you can potentially cut back. Is it eating out? Is it travel? Is it [starting to] shop at discount stores so that you can save a little additional money?”
Stash this money away for the short- and long-term costs that come along with parenthood.
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Get Your Financial Documents in Order
“You should really consider having an estate plan or will in place,” Kennedy said. “We often recommend that our clients review them every three to five years, but when there’s a life event, like [having a baby], you should have a plan in place. What goes along with that is looking at your overall financial picture, making sure that accounts that have beneficiary designations are in order, that those are all set up and they’re in the designated beneficiary’s name in case something untimely happens to you. Look at insurance policies and make sure [your child] is covered in case anything happens because you have another person that relies on you.”
Don’t Go Crazy Buying Every Baby Product Out There
The baby care products market is now a $70 billion industry, according to Statista. There are endless baby products out there and as a new parent, you may feel pressure to buy a lot of stuff that you don’t actually need. But remember that Living Richer is all about living within your means and setting your family up for a financially stable future — there is no point in buying the latest baby product craze if it’s going to put you in debt.
Day 31: Join us tomorrow for our Living Richer series when we discuss how to live richer in retirement.
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Last updated: July 29, 2021