Parenthood is something many people aspire to experience in their lifetimes. There’s likely nothing more precious and rewarding than raising a child. Parenthood adds purpose and meaning to your life and cultivates a unique connection and unconditional love unmatched by any other relationship. Although being a parent has many advantages, being responsible for the safety, well-being, and happiness of another is a huge undertaking.
The Cost Of Raising A Child
While many resources are available to help you navigate parenthood, one area that needs to be addressed is finances. Money isn’t everything; however, it is necessary to ensure your child has everything they need. Believe it or not, it could cost more than $300,000 to raise a child from birth to 18. Although these figures will vary based on the cost of living and where you live, it gives you a general idea of what’s required.
Start Making Changes Today
Whether you’re trying to conceive, have a bun in the oven, recently gave birth, or are going through the adoption process, these financial moves can help ensure you’re ready to provide for your child.
Build An Emergency Savings
Everyone should have a little money tucked away for emergencies. However, a rainy day fund is essential when you’re responsible for raising a child. You never know what they may need that your regular income won’t cover. Ideally, you want to have approximately three to six months of expenses in an interest-bearing account.
Create Or Update Your Will
No one likes to think about death, but it’s a reality we cannot predict or change. Once you have children, you want to ensure that their needs are covered in the event of your untimely passing. Draft a will that includes your children’s names, a list of your assets, and your preferred guardian. Ensure that your will complies with state laws to protect your family. Then have it notarized, make copies, and store them securely.
Increase Or Purchase Life Insurance
A life insurance policy is another financial protection parents should have for their children. Since raising them will cost several hundred thousand dollars, you want to ensure that the appointed guardian has the assistance. If you have a life insurance policy, consider increasing its value and adding your children as beneficiaries.
Add Them To Your Health Insurance
Once your child is born, you’ll need to add them to your health insurance plan. You can do this through your employer or contact the insurance provider directly. Review the family plans to ensure you’ve selected a policy covering the medical services you and your baby need. If possible, you should also sign up for a Health Savings Account or increase your contribution to cover your little one.
Include Baby Products In Your Budget
Your monthly expenses will undoubtedly increase once you have a baby. Therefore, you should update your budget to ensure you can handle everything. Increase the spending amount for things like groceries, healthcare, and utilities.
You’ll also need to incorporate new line items exclusive to your children. Take formula, diapers, and baby clothes, for instance, as your baby will need these things regularly throughout the first year of their life.
Start A College Fund
Finally, start a college fund. While you have no idea if your child will attend, it is an expense that you should prepare for as soon as possible. You can opt for a 529 savings account or simply find a high-yield savings account and make regular deposits. By the time they’re 18, they’ll have a large sum of money to go to school or to provide support in their transition into adulthood.
Parenthood is unlike anything you’ve ever experienced. It changes your life in ways you could never imagine, including your finances. While you can save money on your child’s needs and gain support from family, friends, and outside agencies, it’s always best to be prepared. Use the financial advice above to ensure you’re in the best position to give your new baby everything they need.