Money

6 Important Financial Steps to Take When Becoming a Parent

Keep reading to find out some of the most important steps you can take — from securing a term life insurance quote to creating a family budget

When you have a child, there are a lot of important and life changing steps to undergo. All of a sudden, you are no longer responsible for yourself, but now for yourself and your family. Becoming a parent is expensive and getting your finances in order can be extremely confusing — that’s why we’re breaking down all of the ways that you financially prepare for parenthood. Whether you’re deciding between a term life insurance quote or trying to update your tax forms, we’ve got you covered. Let’s get into some of the most important financial steps you need to take when becoming a parent so you don’t have to stress further down the line.

Secure A Term Life Insurance Quote

Now that there individuals that rely on you, it becomes all the more important to secure a good  term life insurance quote

 

Find a life insurance plan that works best for your family.

Life insurance is a confusing concept. Many who have thoroughly investigated the process and benefits of getting insurance still have questions. A lot of new parents are probably wondering whether or not getting life insurance is even worth it.The simple answer is, as long as there are other people that depend on your income, you should have life insurance

Much like all insurance, life insurance is designed to financially protect your family in case of an emergency. And luckily, for young parents term life insurance plans are relatively affordable. Depending on your health, many young adults can lock in a term life insurance quote that won’t break the bank. Life insurance could be one of the most important steps you take to secure your child’s future, so it’s something that you want to put at the top of your to-do list as a new parent.

Add Your Child to Your New Health Insurance Plan

Though it may seem obvious, many parents don’t know they have to add their newborn to their healthcare plan

Don’t assume your child is automatically covered.

When you have a child, it’s intuitive to think that your health insurance provider would automatically add your child to your healthcare plan. However, many are surprised to find out that is not the case. After becoming a parent, you have to contact your health insurance provider to add your newborn to your existing plan. Having a child is considered by insurance companies as a qualifying life event, meaning that your plan will most likely require you to add your child to the plan within 60 days after their birth. When you add your child to your healthcare plan within the 60 day period, your child will be covered retroactively. Your retroactive coverage will apply to any healthcare services that take place between birth and enrollment.

Review Your HSA Contributions

After you get your term life insurance quote, you should review how much you are contributing to your HSA

An HSA comes in handy for unforeseen expenses.

If you are contributing to an HSA, you should reexamine how much you contribute after you have a child. Once you receive your term life insurance quote, it is time to start thinking about how your HSA will affect your child’s present and future. HSAs can be used to cover lots of current and future health expenses that affect newborn children. For example, the money you save in an HSA can be used for doctor’s appointments, treatments, formula and other related supplies. For some families, an HSA is a great way to set aside tax-free funds for their child’s healthcare expenses.

Update Your Tax Forms

Updating your family’s tax form should be a top priority for new parents

Claim your child on your tax forms so you aren’t overpaying.

When you have a child, you should update your tax forms to claim your child as a dependent. By claiming your child as a dependent, you can set aside money to be used for your child. The CTC (Child Tax Credit) is different from a deduction, which takes money out of your paycheck. Unlike a tax deduction, the CTC is a reduction of your tax liability. For many new parents this additional tax credit helps to cover the costs associated with raising a newborn. 

Contact a Lawyer to Create a Will

Planning for your child’s future requires more than a term life insurance quote, you should also create a will

It is essential to put your wishes for your child in writing.

Though it isn’t fun to think about, you need to plan for your child’s future in the chance of an untimely death. The concept of writing a will may seem overwhelming, but all you need to do is designate a division of assets and a legal guardian for your child. Should the unthinkable happen, your family will be able to avoid court battles that can affect your child’s future. It is also important to remember that you can make changes to your will at any time. So, if your wishes change at any point in your life, you can reflect those changes in your will.

Start Your Household Budget

After your child is born, you should come up with a budget to manage your new expenses

Budgeting for your child is a great way to start planning for their future.

Your whole life changes when you have a child — and that definitely includes your budget. Soon after your child is born, you should reevaluate your current budget to include the new expenses that come with having a child. This includes everything from clothing, diapers, food,and medical expenses. Rather than operating off of an old family budget, you should create an accurate representation of how you will be spending your money on your child. Once you come up with your new budget, you can get a better idea of your financial future as a parent. 

Having a newborn is stressful, but that doesn’t mean you need to stress about money. By following our tips, you’ll take some important steps in planning for your future and the future of your child.

Award-winning writer, blogger, social media consultant and charity campaigner. Social Media Manager for BritMums, the UK's largest parent blogging network Freelance clients include Firefly Communications and Save the Children UK. Works with brands on marketing projects. Examples include Visit Orlando, Give As You Live, Coca-Cola and Kodak. Cambridge Law graduate with many years experience working across three sectors in advice, media relations, events, training and project management. Available for hire at affordable rates.

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