The time leading up to the birth of your first child can be exciting, but it can also be stressful. It’s normal to worry about how your life is going to change and about giving your child the best life possible. It’s also normal for some of that worry to be about finances. The good news is that you don’t have to be wealthy to give your child a great start in life. However, if you are smart about money, not only will the years ahead be easier, but you can also pass down good habits to your child. The tips below can help you prepare.
Change Your Ways
If you’ve always been responsible about money, live below your means, have remained debt-free except for a mortgage, and have several months’ worth of expenses in an easily liquidated savings account, you can skip this part. But most of the time, we won’t have all our finances so neat and tidy.
If you could stand to improve in any or all of these areas, now is the time to do it. If you don’t know where to begin, sit down with a financial professional, read some books, listen to podcasts, check out some websites, or do all of these things to educate yourself and change your habits. A good place to start is by making a budget. If you have student loans, find out if you are eligible to refinance them. A new loan could allow you to pay less each month. You also need to start putting away money in an emergency savings fund.
Creating a Healthy Environment
How was money regarded in your family when you were growing up? Was it a subject of stress? Were your parentssecretive about it? Were they financially savvy, or did they make mistakes because they didn’t know as much about money as they could have? The latter is very common because people are often not taught good money habits early on. Exploring your own background with money can help you create a better atmosphere for your children in which you talk about the subject regularly in a way that is not stressful. This gives you the opportunity to teach your child responsible money management from an early age.
Estate Planning and Life Insurance
It may not seem like the most fun thing to think about with a new baby on the way, but in addition to thinking about the future of your finances, careful estate planning from the start can actually give you peace of mind. You’ll know that the money and right people are in place to take care of your child even if something happens to you. For life insurance, be sure to get enough coverage to take care of your child until adulthood as well as for other expenses if you are the main breadwinner, such as money to pay off the mortgage and for your child’s college education. You may want to work with a lawyer in creating your estate plan and organising your finances. While you can name a guardian for your child in the will, some parents may want to use a trust as their main estate-planning document.