The expectation of a new baby in the family comes with a lot of responsibilities and preparedness.
Waiting until the baby arrives before a parent starts planning financially may not be the appropriate thing.
An online report by bankingadvice.com says parenting requires a couple to reassess their financial position and priorities. Raising a child is an expensive endeavour, complete with an entirely new set of financial challenges.
A new parent should be sure that their lifestyle changes include the following banking advice tips.
Open a special bank account: You may open a special account to plan ahead for the baby. The money in the account can be transferred into the baby’s savings account when it arrives.
Start a school fund immediately: Starting a college fund is probably one of the first things that most new parents do when they are about to have a child. You should consider dedicated college savings plans.
Also consider any prepaid tuition plans that may be available in your state, as well as setting up separate investment accounts that you informally earmark for educational expenses. The ability to take early penalty free withdrawals to pay for a child’s educational expenses is a powerful but underutilized tool.
Increase the size of your emergency fund: Even if you are adequately insured, you are still likely to face an entirely new set of unexpected expenses that can pop up and disrupt your well-planned budget. As a new parent you should work to increase the size of your emergency fund, in order to protect against such expenses.
Update your will and other beneficiary information: When you become a new parent, chances are you will want to update your will to include your new child. You may wish to add your child as a new direct heir, or provide for the creation of a trust for its benefit. And if you don’t currently have a will, then a new child should be just the catalyst you need to finally get one place.
Also remember that every one of your financial accounts including your savings and investment accounts has named beneficiary information that you may want to update as well.