You’ve heard it before. Having a kid changes everything. It’s true—from sleep patterns to financial priorities, nothing will ever be the same again. And that’s a good thing. Here are a few money-related things to think about when your first child is on the way.
Budget for baby
Everyone knows it’s important to set up a household budget so you can track spending and keep debt under control. It’s especially important when you have a child. The costs of many things like food, housing, utilities, transportation and medical costs are going to go up in unpredictable ways. Being able to track that spending should help contain your expenses.
Having a kid will pull out the craziest protective instincts in you. So consider putting some money into an emergency fund to help protect your family against unexpected expenses like illness, an accident or a job loss. Your emergency fund should generally contain the equivalent of three month's salary. It’s a top priority, but try not to let it interfere with your retirement savings.
Send them to college
When the time is right. Saving for your child’s education will probably be one of your biggest long-term financial goals. Like retirement planning, the earlier you start, the more your savings should grow through compounding interest. You have a number of options to help you save, like putting money away in a dedicated savings or investment account or investing in a 529 college savings plan.
You’ll need insurance
Buying a life insurance policy, or increasing your existing life and disability insurance protection, is a great way of listening to your protective urges. Insurance is particularly important if one spouse stops working to care full time for the children. Also, make sure your health insurance adequately covers your expanded family.
A plan for your estate
Insurance can provide some protection for your family if something happens to you, but you may want to consider a solid estate plan to help make sure your wishes are carried out. At the very least, you should draw up a will that names a guardian for your child. Depending on your assets, consider setting up a trust for more flexibility in protecting your child’s interests. Now is also a good time to review your beneficiary designations on retirement plans and insurance policies.
Change of perspective, change of plan
Having a family changes your perspective on life. Now’s the time to make sure your family is financially protected by updating your policies and accounts. As ever, we’re available to help.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal or financial advisor for specific advice about your individual situation.
The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax
Products and services offered through the Voya™ family of companies.
Neither Voya nor its affiliated companies provide tax or legal advice. Please consult with your tax and legal advisors regarding your individual situation.