When it comes to your financial journey and finances, new parents are usually most concerned about making sure they can afford to take care of their little ones. If you’re looking at long-term financial stability, though, it takes more than planning for your daily needs. Your financial plan needs to account for the present as well as the future.
Commit to an Emergency Fund
Even if you have an emergency fund, it may need to increase its size with a new baby on board. According to Centsai, new parents can add to an emergency fund by selling items that are in good condition. If you have some marketable skills, then you can bring in some extra income as well. Another good way to build up your emergency fund is by cutting back on your expenses. This can include cutting down on your cable bill as well as taking advantage of discounts when you’re grocery shopping. It’s important to make sure your emergency fund is accessible, but having a higher interest rate helps.
Related: Why You Need an Emergency Fund
Get Life Insurance
A life insurance policy might be the furthest thing from your mind, but getting the right policy can ensure your loved ones’ future needs are taken care of. It’s good to start early as the premiums tend to be smaller when you’re younger. Applying for life insurance is a simple process, and according to AIG Direct, you may need to present proof of your salary as well as any pertinent records.
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When you submit your application, the company will require a medical exam which includes a blood test. This quick test allows your insurer to gauge your overall health through your blood pressure and cholesterol and glucose levels. They can also find out about your tobacco, nicotine, or drug use. Your blood test results can actually help you get a lower rate in some cases.
Keep College in Mind
College may seem very far away as you look at your little one but with rising education costs, it pays to start early. In fact, according to Northwestern Mutual, it could cost as much as $150,000 to attend a state school in the next ten years. If college is more like 15 years away for you, then you could be looking at a little over $190,000 for the same school. If you’re looking for ways to get your child’s college fund in gear, then your state’s 529 college plans could be a good place to start. While you may be more familiar with a Roth IRA account in terms of retirement, it can also be used to save for a college fund. Make sure you find out how it works so you can follow the right route.
Don’t Forget About Retirement
You might be tempted to put off saving for your own retirement, but it’s recommended that you continue to save for retirement even with your new baby in the picture. As a matter of fact, you might even need to increase your savings instead of cutting down. When it comes to your savings, you can look to a 401(k) as well as IRAs. If you maximize your opportunities for saving and automate transfers, it can make it easier for you to balance your retirement savings with your other obligations. There are even a few credit cards that will link cash back rewards to your retirement savings account.
Welcoming a baby into the family can call for quite a few financial adjustments. Once you make a note of your financial needs, though, it will be easier for you to take a path toward long-term financial stability. This will ensure that both you and your child are well taken care of.