If you’re expecting a child it is normal to feel overwhelmed! We’re going over the most important financial decisions you need to consider before the due date
Becoming a parent can be stressful! As the due date approaches, there are so many different tasks to accomplish and things to get ready. You have to establish a nursery, plan for the birth, and choose a name for your child! With so many decisions, many soon-to-be parents feel in over their heads. Not to mention, the overall cost of raising a child is constantly rising along with national inflation, so many expecting parents are searching for ways to save money wherever they can. Because there are so many things to consider before welcoming a child into the world, we’re going over some of the most important financial decisions parents need to consider while they’re expecting. We’re going to be covering everything from life insurance to maternity and paternity leave—and more! So, if you have questions about preparing your finances as a new parent, keep reading to find out the 5 most important things you need to consider before your child is born.
1. Purchasing Life Insurance for Yourself
Shopping for term life insurance quotes is a must for any expecting parent.
Shop around for different life insurance policies to make sure you are getting the right price.
One of the most important things you can do as an expecting or new parent is to begin shopping for life insurance. Life insurance is so important for new parents because it ensures that your family is supported should the unthinkable happen. If you pass away unexpectedly, your insurance plan can cover the cost of funeral expenses, childcare, outstanding debts, college for your child, and more. Anyone who has any outstanding debts or any dependents should consider purchasing a life insurance plan. Most new parents in their 20s and 30s will want to shop for term life insurance quotes because it is the most cost-effective coverage option for people purchasing life insurance for the first time. As you search for term life insurance quotes, there are a few decisions you will need to make. The first decision you need to make is the duration of your plan. When you are looking for a term life insurance quote, you need to choose how long you want the term to last. Usually, term life insurance policies last anywhere from 20-40 years. The longer your plan, the more expensive your monthly premium will be.
For expecting parents, we recommend finding a term life insurance quote that lasts for 30 years, that way your child will be old enough to live on their own before your plan expires.
The second thing expecting parents need to consider when it comes to life insurance is the amount of coverage you require. While there isn’t a singular dollar amount that is appropriate for all families, there are a few factors to consider when calculating the amount of coverage you need for your family.
You should calculate your coverage amount based on your yearly income, whether or not you intend to send your child to college, and the amount of outstanding debt you have. Using these numbers, you should tabulate how much coverage you need to provide for your family for about 10 years. Once you have calculated a rough estimate, you can begin searching for term life insurance quotes from different insurance companies.
2. Plan for Your Maternity/Paternity Leave
Now that we’ve learned about life insurance, it’s time to plan for your maternity/paternity leave
Consult your employer for details on their maternity/paternity leave policies.
One of the most pressing financial decisions that parents need to think about is maternity and paternity leave. The first thing you need to do when planning your maternity or paternity leave is to find out how much paid time off your company is willing to offer. Your company’s paid time off policy will affect the amount of time you will be able to take before returning to work. There are some cases in which companies do not offer paid parental leave for new parents, so it is a good idea to speak to human resources at your company before you decide how much time off you want to take. The average maternity leave at most jobs is 10 weeks, though the duration will vary depending on your company’s policies. Paternal leave—on the other hand—is much shorter and often lasts only one week. Many new fathers agree that this is not enough time, and thankfully more fathers are becoming able to take more time to spend with their new babies.
We want to take the time to note that unpaid maternity leave is required by law under the Family and Medical Leave Act, which stipulates that employers must offer 12 weeks of unpaid maternity leave. This is an important point to keep in mind when discussing your maternity leave with the human resources department at your company.
3. Find a Pediatrician
Finding the right pediatrician is a difficult, but necessary step to take before your baby arrives.
Babies require frequent pediatrician visits.
Though finding a pediatrician may not seem like a major financial decision, healthcare is a major cost associated with having a child. In fact, during their first 3 years, your child will see their pediatrician an average of 9 times. These appointments are just for routine checkups and vaccinations, not for any sickness or other health issues. Since you will be visiting a pediatrician so often, we highly recommend using an in-network pediatrician to avoid overpaying for visits. Finding in-network options is as easy as visiting your insurance provider’s website and looking at a list of covered practices.
Deciding on a pediatrician is the more difficult part of the process since parents want to find the best possible pediatrician in their area. There are also a lot of different factors expecting parents need to consider before making their decision including:
- The location of the practice
- The pediatrician’s experience and education
- Office hours
- Preferred methods of communication
After going through the different factors, you can decide on a pediatrician for your child. If you are having trouble finding a pediatrician that fits your needs, we recommend asking other new parents that live in your area for suggestions. Sometimes, people who have just been through the process of welcoming a child into the world can be your best resource for these types of decisions.
4. Establishing a Will
Plan for your child’s future by creating a will
You can always alter your will as you age.
Just like purchasing a life insurance plan, establishing a will is an important step in financial planning for your child’s future. No one wants to think too hard about what will happen after they die, but it is a necessary step before your child is born. Without establishing a will, your property and other assets will be divided up according to local law without any of your input. The most important thing you will dictate in your will is a power of attorney. In the case of your untimely death, the person you designate as power of attorney will be tasked with executing the requests made in your will. In most cases, power of attorney is designated to a spouse or another very close relative. You will also stipulate any care preferences for your child in the event of your passing as well as assets that you intend to leave to your child. Without a will, these decisions will be left up to remaining family members and courts, which only creates confusion and can turn into added stress for your family.
To start writing your will, you will need the help of an attorney. Your attorney will make sure that all of your assets are taken care of and all future plans for your child are noted. Remember, your will does not have to be written in stone, you can make alterations to your will at any time as your life and priorities change.
5. Get Healthcare Coverage for Your Child
Before your child arrives, you need to make sure they are covered under your health insurance
Notify your insurance company before your due date.
As an expecting parent, securing medical coverage for your child is a must. Many health insurance companies will cover new babies for up to 60 days after their birth. However, some insurance companies require you to notify them within 24 hours after your child is born, which is why we recommend letting your insurance company know about your due date before it arrives. After your child is born, you do not have to wait until the next enrollment period to establish coverage, as giving birth is deemed a qualifying event.
If you are an expecting parent who does not currently have health insurance through work, we recommend purchasing a policy from the Affordable Care Act Marketplace or Medicaid.
We’ve just explored the top 5 financial decisions expecting parents need to make, but our list is far from exhaustive. There are so many financial decisions expecting parents need to make regarding saving money, budgeting, debt management, and more. We hope you found our list of financial considerations helpful! For further advice, we recommend consulting a financial advisor to make sure you have all of your bases covered before the big day. Your financial advisor will answer all of your most pressing questions and help you make sure that you have properly planned for your new baby. The more you can take care of ahead of time, the less you will have to deal with while you are focused on raising your child!
Have you considered any of these financial decisions too?
*Disclosure: Collaborative Post
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