Starting a family is an exciting and emotional time. From doctor's visits to handling calls from curious relatives, expecting parents have so much on their plate that it can be easy to feel overwhelmed. With the many expenses that a new family needs to consider, developing a good financial plan is an essential piece of preparation. It is best to consult your financial advisor to get a plan in place, but here are a few things to consider to help you get things started.
Acquire a Social Security number
After the birth of a newborn, one of the first things to do is get your son or daughter a social security number. This number is necessary to claim your child as a dependent on your income tax return and to enroll him or her for medical coverage. You can apply for a social security number when giving the hospital information for your child's birth certificate, or go to www.socialsecurity.gov for further information.
Review your employee benefits
Another important step is to conduct a thorough review of your benefits program at work. When adding your child to your health insurance plan, you'll also want to make a few changes to ensure that your child is covered with the best care possible.
During this assessment, you should also take a minute to review your tax withholdings on your W-4 form. To reflect the addition to your family, check off additional allowances to claim your son or daughter as a dependent. This increase in deductions will increase your take home pay, freeing up a little money to help care for your child.
Evaluate life insurance
An increase in your life insurance coverage is a fundamental part of building your financial plan. If something should happen, you want to make sure that your family is taken care of. Also, check beneficiary designations on your insurance policy, 401(k) plan, etc. to make sure your money will go where you want it.
Create a budget
If you haven't been monitoring your spending, it is definitely the time to start. Expenses on the horizon include everything from buying a crib to starting a college fund. Creating a budget will help map out where your money is going, and will help you determine the best use of your resources. A budget can also serve as a valuable tool in helping to identify how much you are saving for future needs.
Remember that balance is key
A key thing to keep in mind is that many financial decisions are costly and cannot be made at once. Most parents tend to put their child's needs before their own, and fail to realize how important balance is to achieving overall goals in the long-term. When assessing your situation, remember to maintain a balance between providing for a child's needs and caring for your own financial future.