Four financial planning tips for new parents
It is no secret that raising children is expensive. The average middle-class family can expect to spend about $233,610 for all of their child’s needs from birth through turning 18. Of course, meeting the demanding costs of raising a child can be achieved month by month with your paycheck, but it helps to plan in advance to reduce the strain of many of the expenses. Take a look below for four financial planning tips for new parents that you should start using today.
1. Have an emergency fund? Make it bigger.
Generally speaking, our financial experts recommend that you have at least three to six months’ worth of living expenses to be prepared for emergencies. You never know when an automobile accident, medical emergency, loss of job or housing repairs may be necessary, so it is a good idea to have some funds on hand.
If you already have an emergency fund in a savings account, you may want to increase it now that you are having a child. Factor in the costs of raising a child into your budget, and consider increasing your emergency fund to make sure you can cover these costs in the event of an emergency.
2. Review your tax advantages.
Child care and other expenses of having a child are known to be expensive, so the government helps out by offering tax breaks for parents. If you meet the IRS’s criteria, you may be eligible for credit that covers up to 20% to 35% of your parenting expenses.
3. Start saving for college now.
College is expensive. Tuition alone in 2020 cost thousands of dollars at an average of $9,687 for public, in-state students and $21,184 for public, out-of-state students. Those who attended private colleges accrued the highest fees at an average of $35,087.
The cost of education is only going up, so as a new parent, you can help your child prepare for the costs of education by saving now.
4. Remember your retirement.
We understand wanting to prioritize your child’s future over your own, but you must not forget about your retirement savings as part of your financial plan. When your child is ready for college, they will likely have other options for covering the costs, such as scholarships and loans.
Remember this if you have to choose between saving for college or your retirement. No one is helping you with your retirement savings except yourself. Do not miss out on reaching your retirement goals because you put off your savings.
Talk to a ProVise CFP® professional about financial planning for new parents
At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about financial planning for new parents? Contact ProVise today to schedule a complimentary consultation.