You’re expecting your first baby – congratulations! Perhaps you’re busy decorating the nursery or registering for your baby shower, as these are all fun parts of preparing to bring home a new addition to the family. But there are other important things to think about when expecting, including financial planning, life insurance and readying your cars for a little one. Consider these tips for new parents as you take on this major step in life.
Money Tips for New Parents
When it comes to financially planning for a family, Ellen Morvant, CFP®, APMA®, Ameriprise Financial Advisor with Waterfront Wealth Management, recommends that expectant parents speak with a CPA about potential tax breaks and review their employer benefits options.
“There have been some recent changes to the Child and Dependent Care Tax Credit that make it more beneficial to many families. New parents should also review their employee benefits options. Dependent care Flexible Spending Accounts or FSAs are also a great way to pay for daycare with pre-tax dollars,” Moryant said.
In addition, Moryant advocates for building an emergency fund, which she believes is essential to provide a cushion in case of the unexpected. “With a new addition to the household, the likelihood of unexpected expenses increases and the monthly fixed expenses are almost certain to increase,” she said.
Moryant recommends beefing up the typically recommended three-month reserve, especially for single income households. “If one parent is going to stay at home with the child, set a target of six months expenses for your cash reserve. This larger amount provides extra cushion in the event that the sole earner in the household experiences any disruption in their employment.”
AAA member Briana Kulik and her husband are parents to two daughters, ages five and two. She went through her own process of financially planning for her family as her children were born.
“When starting to grow our family, I knew that I wanted to lower my hours at work to part time to be able to spend time with the kids. This meant our income would be significantly altered. My husband and I figured out a monthly budget with all our expenses and what income we needed to continue to pay our bills and still live a similar lifestyle,” said Kulik.
Kulik and her husband started by adding up all the newly added expenses like childcare costs, food and clothing, and limited their spending on non-necessities like going out to dinner and shopping trips. They also refinanced their student loans. “It was difficult to cut back,” she said, “but we knew it was important for our family.”
Life insurance is the kind of thing that you don’t want to think about, but it’s one of the most important things a new parent should know about. If you don’t already have a policy, your growing family may be the extra push needed to invest in one. Think about it this way: If you were no longer here, would your family be financially secure, and could your child continue to be provided for in the way you would want them to be?
Tim Boyle, life and annuity manager at AAA Northeast, says that new parents should look into life insurance as soon as possible.
“Life insurance is crucial for a new family. A life insurance policy can help fund your family’s education and future expenses. It can help preserve the future you envisioned for your children,” Boyle said. “The younger someone looks into life insurance, the better. By getting a policy when you are young and healthy, you are able to lock in the lower price for your entire life. Life insurance is flexible and can be updated as different life events like a marriage or children occur.”
AAA Northeast has several life insurance products that can benefit new parents. The first is a term policy which will protect the insured for a certain number of years with a rate that will not change during that time. The second is an indexed universal policy, which Boyle said is the best policy for combining life insurance, retirement planning and saving for college.
Car Safety Tips for New Parents
As new parents plan for their baby’s arrival, safety is sure to be top of mind, especially in your vehicle. Soon you will be carrying around some precious cargo!
Prepping one’s car and installing car seats can be confusing. Luckily there are AAA professionals like Adelle Zocher, Public Affairs Specialist at AAA Northeast, who is also a certified Car Passenger Safety technician, that can help.
Zocher said over 50% of car seats are installed wrong. That’s why it’s so important to consult with a technician.
She said the biggest mistake new parents make when it comes to car seat installation has to do with tightness. If your car has a Lower Anchors and Tethers for Children or LATCH system (which all vehicles made after 2002 have), it’s a matter of pushing and pulling in the right direction.
“I always tell people, you’re not alone if you’re doing something wrong; there’s nothing wrong with you; you just need someone to guide you and show you,” Zocher said.
“The technician educates the family on proper usage every time,” she goes on to say. “It’s not just about getting the car seat installed…it’s getting the parent involved in the process. So, it’s not an installation service. It’s an educational experience.”
Kulik said when it came to picking out and installing car seats for her children, safety was the top priority. “Thankfully, we were able to find safety information, recalls, crash test results, etc. on each individual car seat online which made choosing one a little bit easier. We installed the car seat based on the manufacturer’s instructions using the LATCH system in the car, which we were told was the safest,” she went on to say.
AAA Northeast has annual car seat clinics, but Zocher (who works out of the Hamden, Conn., office, the only AAA office with a fitting station), is also available for help by appointment.
Following these steps from financial experts, a car seat installation professional and a parent who has been in your shoes is a sure-fire way to ensure that when your little one arrives, you’ll not only be ecstatic, but also left feeling assured and prepared.