Get Your Financial Future Ready for Baby

Get Your Financial Future Ready for Your Family

February 1, 2018

Get Your Financial Future Ready for Your Family

Get Your Financial Future Ready for Your Family
This simple checklist will help you get your financial future in shape for your growing family.Get Your Financial Future Ready for Your Family

Adulting is tough, but parenting? That’s when things get real. Caring for and raising your child is a lot of work, from late-night diaper changes and feedings to well-baby visits, worrying about them when they’re sick and finding the right preschool. And then there are the teen years… Good thing little ones are so adorable.

Add in dealing with seriously grown-up things like estate planning, life insurance and savings, and this whole adult thing can seem overwhelming. But it doesn’t need to be.

Part of being a parent is thinking ahead to the future. Chances are you put a lot of planning into preparing for and having your baby—prepping their nursery, researching childcare and finding the right pediatrician. Getting your finances in order and budgeting is just another step in shaping your family’s future.

Here’s a simple checklist to help you get your financial future in shape for your growing family.

🗸 Estate planning. It’s a pretty stuffy term, but estate planning isn’t just for people with massive wealth. Once you have a child, it’s important to create or update your will not only to designate where your hard-earned property and assets will go, but to decide who be the legal guardian of your child. If you don’t have a legal document naming one, things can get very messy if something happens to you—like the state naming someone to care for your little one. Not good.

If your finances are complicated (like you own your own business), it’s probably a good idea have a lawyer help you write a will. But for many people, creating a will and naming your child’s guardian can be relatively quick and easy (just be sure to give a lot of thought to who you designate!). There are affordable online options (think under $100) that’ll walk you through the steps, and give you peace of mind.

🗸 Name your beneficiaries. If you have a 401k, IRA or company-sponsored life insurance, it’s a good idea to take a look at who you’ve named as a beneficiary, particularly if you set it up a long time ago, and update it, if necessary. You can name anyone you want-your spouse or partner, child, parents, siblings, even your best friend. For many plans, you can split the percentage up among people, too. Most people name their spouse, but it’s up to what you to determine what’s right for your family. Don’t forget to update investment accounts you may have from previous jobs, too.

🗸 Get a life insurance quote. No one really likes to talk about life insurance, but, honestly, what’s being a parent without having some tough conversations? Life insurance can be a really important part of your family’s financial well being. Ideally, parents—employed full or part time or stay at home—would have a policy in place so their family will be financially secure in case something happens to them.

Life insurance doesn’t have to cost a fortune. Typically, the younger and healthier you are, the less you’re going to pay for a policy. So it’s smart to get one sooner rather than later, particularly as your family grows. For example, a 30-year-old nonsmoking woman could pay around $250 a year for a $295,000 10-year term policy. That’s less than $1 a day-cheaper than your daily coffee habit.

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🗸 Build an emergency fund. Saving for the future can seem daunting—and not particularly fun-but if an emergency happens, you’ll be glad you did. Work toward building three to six months of savings to cover your family’s expenses. What counts as an emergency? Think a major car repair, the loss of a job or high medical bills. What’s not? That trip to Hawaii you’d really love to take. Sorry!

You might think, nope, can’t save that much, but even a few dollars here and there can add up. Try setting up automatic transfers to savings with every paycheck, so you never miss the money. And at the end of each month, if you have money left over, move it into your savings.

Put your money in a savings account with as high of an interest rate as you can find. You want to be able to access the money at any time, so make sure there are no penalties or restrictions as to when you can withdraw your money.

🗸 Set up an education fund. Just like your retirement (which you should keep saving for!), your child heading off to college seems like a looong way off. But like that parenting cliche goes, the years go really fast-it’s just those hours that seem to go on forever. Start planning for your little one’s financial future now. You can establish a 529 plan that explicitly goes toward college, or set up a savings account in your child’s name. Encourage your family and friends to contribute in lieu of gifts come holidays and birthdays. Future you will be happy you did.

The takeaway? A lot goes into financially preparing for a baby! While you’re prepping, have you thought about getting life insurance? Now you can crowdfund your life insurance policy premiums for the first year by adding it to your Babylist registry. Learn more here.

Article sponsored by The Prudential Insurance Company of America, Newark, NJ. This article is provided for your general information. Prudential and its representatives do not give legal or tax advice.

The pricing example provided is based on Term Essential (PLTIC-2016 or ICC16 PLTIC-2016) issued by Pruco Life Insurance Company except in NY, where it is issued by Pruco Life Insurance Company of New Jersey. Both are Prudential Financial companies located in Newark, NJ and each is solely responsible for its own financial condition and contractual obligations. The availability of life insurance coverage and rates will vary based on company underwriting criteria including, but not limited to, age, sex, health history, smoking status, and residency.
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