Although they’ve been told that having a child is much more expensive than they can even begin to imagine, few new parents are really prepared for the financial steps they must consider once that baby is born. There is so much more to think about than the cost of supporting another family member, and unless you are prepared for all the financial decisions you will need to make, the cost of parenting just might overwhelm you. The following 5 financial steps every new parent should take will help you begin sorting your finances long before the baby arrives.
5 Financial Steps Every New Parent Should Take
1. Immediately Add the Baby to Your Health Insurance
If there is one thing many parents don’t think about in the hours and days immediately following the birth of their child is that the baby isn’t automatically covered by their health insurance plan. After all, the plan covered a portion of all those doctor and hospital bills, so it may not dawn on you that your baby now needs to be covered as an individual person outside of their mom! The moment the baby is born, call your insurance provider and add the baby.
2. Cover Your Co-Pays ASAP
Here, a word should be said about keeping those co-pays covered. Future coverage from your health insurance provider may be dependent on keeping those co-pays current simply because the providers they work with may be limited in your area. What would happen if there was one OB-GYN doctor in your local region and you plan to have another child in the near future? Some families like to keep children close in age, so they become playmates as well as siblings.
If you aren’t current on co-payments, you might need to look elsewhere, and much farther from home, for a doctor. It just might mean taking out a loan and if you aren’t sure which kind, check out several options you can research on this site. A personal loan can also help with other expenses you may have been unprepared for, so this may be something worth considering at this point in time.
3. Apply for a Social Security Number
Don’t forget that there is little you can do without a social security number, from adding your child to your health plan to registering them in daycare so that mom (or dad!) can return to work after maternity leave. Believe it or not, getting a social security number is a financial step which must be taken, especially when it comes to the following steps you should take after the birth of your baby.
4. Start a College Fund Immediately
According to a 2012 article in the U.S. News, the cost of a college education was rising by 6.5 percent a year. At that time, the cost of college per year was projected to be over $30,000 by 2030. Can you imagine what it will be by the time your child is of college age? A four-year degree could buy a new home! That site mentioned above, Crediful, can help you with more than learning how to take out a personal loan. You can also find advice on how to find the best savings accounts as well. Over a twenty-year period and with compounded interest, you may have saved enough to cover some of those exorbitant costs of post-secondary education.
5. Update Your Dependent Status with the IRS
The birth of a baby gives you another dependent as well as a number of other potential tax breaks you may be eligible for. From healthcare costs to childcare and beyond, there are different tax breaks you may qualify for, so don’t forget to see your employer to fill out a new W-4 the very moment your new baby arrives.
Also, you may wish to get a bit of tax advice on just how many dependents to declare for withholding. Some high earners claim fewer deductions on payroll so that a greater amount is taken out each pay period. In this way, when it comes to filing your annual return, you have paid too much and may end up owing little to nothing when that dreaded April 15th comes around! This is something to consider if you expect to owe a huge tax bill.
There are so many other financial steps you may want to consider taking, but these 5 are critical. Not only do you want to ensure your baby’s future with things like term or whole life insurance but you want to know that you will have the medical coverage necessary for your baby’s health and the money to support that child in the here and now. What you do today affects all of your baby’s tomorrows and that’s a fact.