By Sarah Stewart Legal Group
A new baby brings parents so much joy. There are so many things you have to do to prepare- get baby clothes, diapers, bedding, design a nursery, just to name a few. The list seems never-ending.
Usually one of the last, but most important, items on a new parents’ to-do list is to get their financial and legal plans in order. We’ll cover the 5 most important ways to prepare for new baby legally and financially today.
(1) Get Life Insurance
Life Insurance serves a very specific purpose. Life Insurance allows you to protect your family financially and prepare if something happens to you. Life insurance helps your children pay for college and/or your spouse take care of the day-to-day necessities, like daycare, food, and shelter, if you are not there to contribute.
(2) Set Up A Monthly Automatic Draft Deposit for Savings
Many banking institutions allow you to schedule a monthly draft from your checking account to your savings account. Set up a high yield savings account with a monthly draft you can afford so you can guarantee you are building your emergency fund. Experts recommend having 3 to 6 months of bills in savings in case an emergency arises. Even a small monthly amount will add up over time.
(3) Make an Estate Plan
Now that you have a bouncing bundle of joy on the way, you need to think about who will take care of him or her if you and your spouse die. It is not a pleasant thought, but it is much better to decide now than to not have made the decision at all if that day comes sooner than you expected.
You will also want to be sure you have a plan in place for how your money will be spent for your children’s care. Without a trust, the money will go to the children’s Guardian, or the children if they are 18, as soon as you die. If you want to make sure the money is protected, or have specific wishes for when the children can access the money, you will need a Trust to enforce those wishes.
(4) Reduce Debt
One of the greatest scams of all time is credit card debt. Anyone who has suffered from stifling credit card debt knows the downfalls of using credit cards for purchases. Having a baby will only accelerate those problems. Make a plan and budget now to help you be free from debt.
(5) Put Money Aside for Baby
Whether you choose a simple free savings account with your local bank, or a 529 education savings plan for advanced education, it is important to have some money stashed away for your child’s future-whether that future be education, entrepreneurship, or traveling the world. Over 18 years (or more), even a small monthly savings can add up. So, start saving today.
A new baby brings so much joy, excitement, and responsibility. Be sure to use this guide to prepare for your baby and your financial future.