Financial tips new parents need to know
By Jason Buckland, Sympatico / MSN Finance
Whenever I visit back home with my parents, they like to put me to work.
And, of course, when I gripe about having to take out the recycling or mow the lawn, they can always fall back on the ‘We forked over the $$$ to raise you, it’s the least you could do’ defence.
They’re right, but that doesn’t stop me from joking that I’ll put ‘em in a home before they know it if the chores keep coming. Somehow, I’m the only one that finds this funny.
Anyhow, I thought about this give-and-take when I came across a Washington Post article about what financial planning new parents need to consider.
Turns out, a crib and diapers might be the least of your expenses. The Post recommends you take a few steps to ensure your cash is in line for the arrival of your new one:
1) Create a budget –- Experts suggest you first concentrate on the big expenses like paying for the hospital delivery (if applicable) and compensating for any unpaid leaves from work before fretting over clothes and toys. “If one parent plans to stay home indefinitely with the baby,” says the Post, “make sure you can afford to live on one income and adjust your spending habits accordingly.”
2) Get life insurance -– Sounds like a no-brainer, but oftentimes how much to take out is in question. It’s recommended you should generally get coverage worth four-to-eight times your annual salary. Review your employer’s disability insurance policy, too. You may be covered already for about 60 percent of your salary should you get hurt on the job, but many new parents might want a supplemental policy to fill in the gaps in the plan for some added protection.
3) Draft a will -– I can’t think of a bigger buzz kill for an expecting parent in their late-20s than deciding what to do with your estate (or basement apartment) when you eventually kick the bucket. Yet regardless of whether it puts you in a depressive funk, this is a pretty important one. “No matter your financial situation, every parent needs a will to designate a guardian for his or her child if both parents die prematurely,” the Post advises. “Without a will, a court will decide who will take responsibility for raising your child. Make sure you designate an alternate in case, for some reason, your first choice isn’t available.”
You can check out more tips on the financial shocks new parents face in this MSN story, too. Here you’ll find that old harrowing stat that it costs about $250,000 to raise a child from birth to age 17.
That tallies out to about $14,700 a year or, if you’re scoring at home, the cost of getting around a thousand ‘Who The Hell Are We Trying To Fool?’ T-shirts designed and printed.
Retirement home doesn’t sound so bad now, does it?