Becoming a new father is exciting and brings on a lot of pressure as well with all the new responsibilities. Here are 5 smart money moves for new dads to help ease a bit of the financial pressure that can come your way.
On average, a family that earns a mid-range income will spend almost $13,000 every year on each child till they turn 17 years old. Therefore, it would be wise to start saving up as early as possible, even before your child arrives. Here are 5 smart money moves that new dads should look at this year to get a head start on their finances. Before that, here are some Father’s Day jokes to lighten up.
Buy life insurance right away
Like we said earlier, raising a child is expensive, and the last thing you want is for your family to be left in the lurch if something unfortunate happens to you early on. Of course, this is something you wouldn’t want to think about right now just when your new baby is here, but you should prepare for such a situation. This is where you need to make smart money moves as new dads.
Don’t just rely on the life insurance you’re given by your employer. Get your own and make sure that the coverage is worth at least 10 times that of your family’s yearly income. A strong life insurance policy will help give your family the necessary finances to continue life as usual if you’re not around. So, get a good term life insurance right away and protect your loved ones.
Review your budget
Budgeting is a part of being financially responsible. It helps have better control over your money since you know exactly how you are spending your money. A new baby means that a whole lot of additional expenses are coming your way. So, it only makes sense that you review and restructure your budget to include the new expenses. Doing this may require you to push the target dates for some of your financial goals further down the calendar. However, you’ll get an idea of how you can manage all your expenses and savings plans accordingly. Look into child tax breaks, especially when it comes to childcare. Getting good childcare early on will help your partner get back to work soon and contribute to the family’s income while getting tax breaks on the childcare expenditure.
Update your health insurance plan
Don’t forget to add your kid to your health insurance plan. It is important that you notify your insurance provider about the new addition so that they are under coverage as well. Typically, you have to notify your insurance company within 30 days of your child’s birth, after which you may find it challenging to get their name added. So, ensure that your child’s medical expenses are covered.
Set up your will and estate plan
Just like with getting a life insurance policy, you also need to prepare for the possibility of your assets and money going into the right hands if something unfortunate were to happen to you. Estate planning is important to ensure that your assets go to your family. This ensures your child lacks nothing if you’re not around to take care of them. This process usually involves creating a will, a power of attorney, an executor, a guardian for your child, etc. Contact an experienced attorney to help guide you through this process.
Set up a college fund right away
Let’s face it, college isn’t cheap. Unless your child gets a scholarship, chances are that educating your kid is going to be pretty expensive. This is especially if they’re going to study abroad. Hence, the sooner you start saving up for your kid’s college expenses, the better. Look at creating a 529 savings plan as soon as your child is born. This is an investment scheme with tax advantages.
This allows you to save up for your kid’s education. It can go to fund education at private institutions as well. Start by setting aside $500 into it periodically and increase it as your income increases. Bottom line, when your kid gets into college, you won’t have to worry about the expenses then. You’re well on your way to making smart money moves as new dads now.