Having a new baby brings forward a lot of changes in your life, particularly when it comes to your finances.
The cost of raising a child from birth to age 17 is estimated at $233,610 for an average middle-income family reported by the U.S. Department of Agriculture (2017). This number continues to grow due to rising interest rates.
With such a large number upfront, it can be intimidating. What should you focus on first?
Here are some recommendations to help guide you through this new chapter of your life.
- Review your monthly cashflow: this includes your current spending and projected spending for when baby arrives – Click here for cashflow template
- Hospital costs for delivery
- Diapers, food, formula and clothes as they grow older
- Family outings and trips
- Items to keep your home ‘baby safe’
- Daycare costs: Do some research in your area. There are programs available that help families with the cost of daycare for parents who need to work.
- Review and update health insurance and additional costs that may apply
- Increase savings for an emergency fund, if you can
- Set an appointment with an attorney to review your will and other specific items that will help to protect your child’s future
- Education costs: whether this be a private school or college – starting this off as soon as you can is paramount. Consider opening a 529 account and begin making monthly contributions.
- Life insurance: Preparing your family for the unexpected is essential. Even though this can be an emotional subject, securing financial protection can give your family peace of mind.
We understand that planning for big life changes can be challenging. If you would like to book an appointment with one of our CERTIFIED FINANCIAL PLANNERS™ (CFP®), please visit our contact page.
To review additional content, click here: https://www.schwab.com/learn/story/baby-on-way-are-you-ready-your-new-financial-reality