A lot of changes occur in your life with the birth of your first child. We’re here to help see to it that the financial pieces are taken care of. The cost to raise a child through age 18 is $245,000 for an average-income family1. This dollar amount doesn’t include inflation as your child grows or college education. North Star advises the following steps to help prepare you for your new family addition.
Your hospital may provide information or forms on how to apply for a social security number prior to returning home. If you are still in need of information, it can be found at www.ssa.gov.
Consider increasing the number of allowances you check on your W-4. This allowance increase will increase the amount of take-home pay to help offset increased deductions you’ll receive.
Health Insurance Plan
It’s best to check with your carrier prior to the birth of your child and it’s common to automatically add a child after its birth. Review your plan to see if your pediatrician is on the plan, what is covered for well-baby checkups, and if you are able to do any changes outside of open enrollment periods.
Flexible Spending Account
Consider signing up or increasing your flex contribution if it’s available for medical purposes and childcare.
We recommend increasing your life insurance policy to provide for the future and to add your newborn to your policy. We also recommend disability insurance in the event you are unable to earn an income due to an injury.
Designating a guardian for your child in the event of tragedy is important and eliminates further trauma for your child if it happens. Discuss who you would like to care for your child and talk it over with that person to make sure he or she is willing and able. In some circumstances, it may also be a good idea to consider establishing a trust to manage estate assets for your child.
Babies don’t come cheap! Start saving or begin a household budget now because needs grow as a child grows – a larger home to hold all those toys from grandma, that minivan you’ve tried to avoid, medical expenses if your child needs stitches after falling off a bike.
When that first child arrives retirement may seem out of reach and something you’ll deal with later. Delaying retirement saving makes it harder for your nest egg to grow. Neglecting retirement savings also doesn’t do any favors for grown children who could be faced with the burden of financing their parents later in life.
The sooner you start funding for your child’s education the easier it is to reach the goal. That’s because the power of compound earning potential grows stronger as it ages. North Star advisors are ready to walk you through different options for college funding options.
You can’t put a price on the rewards of becoming a parent. Let us help you prepare for the financial effects of adding to your family.
Contact your North Star Resource Group financial advisor today.