Widow | Mom of 2
Becoming a parent is a game-changer. Becoming a financially prepared parent is a game-changer too. It makes the parenting role a little easier when your finances aren’t out of whack, allowing you to focus on more pressing issues, such as where you put your child’s favorite blanket, how you’re going to get them to school on time, and how to get through homework without bribing them with an entire bag of candy.
Start with the Estate
Financial planning typically involves budgets, and we’ll get to that, but estate planning is an important part of the process as well. You’ll want to add the kiddos into the will, appoint a guardian to take care of them should the unthinkable happen, and name a financial and health care power of attorney for yourself if you haven’t done so already.
Now that kids are in the picture, life insurance is a definite must, specifically term life insurance. It’s a budget-friendly option that acts as a financial safety net, helping offset lost income and covering the cost of funeral expenses, unpaid bills, and even college tuition. There are various period lengths, with the typical ones being 10, 15, 20, or 30 years, but ideally, you want the policy to last as long as there are children who depend on you financially.
Fine-tune Your Budget
Hopefully, you had some sort of budget pre-children, but now that they’re here, having one is a definite must. Children are expensive, and any parent will tell you the same. The expenses change as they age (ahem, diapers we’re looking at you), but there are some expenses that are ongoing such as food, clothing, childcare, school, activities, etc. Amidst all this, you’re supposed to somehow manage your money and put aside savings. Go over every single thing with a fine-tooth comb and cut out all unnecessary expenses.
Make smart financial changes, such as ensuring your company is matching your retirement contributions; updating your HAS, FSA, and employee benefits; and creating an automated savings plan that puts aside a portion of your paycheck. Most importantly, remember that being a parent isn’t about buying all the latest and greatest stuff. Your child can have just as much fun spending the day at the park with you and enjoying a gas station ice cream as they could going to the zoo. Fun memories can be bought, but don’t overdo it.
Plan for College Now
College isn’t always the route every child takes, but with the rising cost of college tuition, it certainly doesn’t hurt to be prepared and start financially planning for college ASAP. Open up a 529 college savings account (bonus: it’s tax-exempt), and start setting aside small amounts each month. Every little bit helps, and by the time your child reaches college age those little bits will have added up substantially. Ask grandparents and family members to contribute to the account on birthdays and holidays as opposed to spending money on toys.
Once your child hits high school, start talking about their potential college plans. If it’s something they’re interested in, suggest they get a job to help build savings for college and other expenses such as gas or outings with friends. If there are talents they’re particularly good at, such as sports, music, or dance, encourage them to continue pursuing them by not only being present but investing in them via lessons, equipment, etc. Many talents result in scholarships both big and small, so be a supportive voice. However, don’t push your child to participate in a particular activity simply because it might pay out; your child should thoroughly enjoy the activity rather than feel obligated and pressured to participate.
Becoming a parent is one of life’s greatest joys, but it’s a bit expensive too. The joy and happiness far outweigh the expenses, and thankfully there are ways to offset those expenses so that you can focus on the moment. It passes by in the blink of an eye, and you don’t want finances to have been your main focus!
About Sara Bailey
After losing her husband Greg, Sara Bailey created TheWidow.net to support her fellow widows and widowers. Through this avenue, she shares her journey of grief so that she can provide insight and hope for others who experience loss.