Start Planning For / My Family

Babies mean new joys and yes, new responsibilities

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Welcome to parenthood, where nothing is the same as it was before. You can expect to lose a few hours of sleep once the baby arrives, but you shouldn’t be losing it over the financial implications of your new bundle of joy. With the right degree of planning, you can set up a future that takes care of your family.

There are multiple ways to reorganize your finances around your new priorities:  

  • Start by adding your child to the benefits you get at work. 

    If your employer offers a company benefits plan, the first place to start protecting the new addition to your family is at work. Having a baby should enable you to change your benefits enrollment status. Take advantage of the opportunity to add coverage for your child to any plans you’re offered, such as medical, dental, vision, and life insurance. If your company offers it, look into accident insurance to ensure that even in the case of an injury, your wallet won’t suffer a sudden strain that you didn’t expect. Some companies also offer critical illness insurance, which can help cover expenses if you or a dependent are diagnosed with a critical illness. This protection may include childhood conditions such as Down syndrome and cystic fibrosis. It’s important to note that you must purchase this insurance before having the baby.

     

    You could also look into opening a Flexible Spending Account (FSA), if you haven’t already done so, and put a bigger allowance in it prior to the birth. Most FSAs will cover deductibles and co-pays, along with new medical expenses that can come with babies. By lowering your taxable income, you’re getting the covered services cheaper. Note: unspent FSA money is normally lost, so check your firm’s requirements and estimate your needs ahead of time.

  • Protect your baby by protecting your income. 

    Whether you purchase life insurance through your job or on your own, this is a time in life when most people make sure they obtain it. Your workplace benefits probably provide term life insurance plans that expire in set amounts of time. You could also look into permanent life insurance such as whole life, which never expires as long as your payments remain current, and helps you to build a long-term cash-value asset. You may also want to consider disability income insurance to replace your paycheck if you become too sick or injured to work. These options can help provide peace of mind, knowing your child will be protected no matter what happens to you. 

  • Start saving for college. 

    Saving for college should be treated separately from other long-term savings goals, such as retirement. 529 plans, for example, are vehicles specifically designed to save money for college. If you save money in a 529 plan account you set up early on, both the balance and interest will have had time to “roll over” and build to a significant number. Another option, with more flexibility, is permanent life insurance. Such policies can offer tax advantages and spending flexibility that you may not find in other plans. 

  • See a professional financial advisor, whether it’s before or after your child is born.

    It's important to set up the right environment that will enable your family to grow and prosper. You may also want to look into setting up a will now, specifying what will happen to your resources in the future. A financial professional can help make recommendations about how to best protect your new family and arrange your finances in a planned way, so that you can further the opportunities – for both yourself and your celebrated new arrival.

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.