Having a baby is an experience unlike any other in your lifetime. Your precious bundle of joy will rely on you to learn everything – from talking to throwing a baseball to driving a car – and you will make many precious memories as he or she grows up. Unfortunately, these memories don’t come cheap!
According to the U.S. Department of Agriculture, middle-class families can expect to pay nearly $250,000 to raise just one child to the age of 17, and if you want to send your kid to college without the burden of student loans, you can go ahead and add another $100,000 to that total. While having a baby is a wonderful, exciting experience, the reality is that your new addition also comes with some hefty expenses. That means you must be financially prepared well before you return home from the hospital.
With many families struggling to make ends meet in this tough economy, it may seem near impossible to prepare for the financial responsibility of having a child. However, there are simple measures that every soon-to-be parent can take in order to provide their little one with everything necessary to succeed in this world.
To start, your main goal should be to reduce all risks that could negatively affect your child. First and foremost, you need to protect your child from any disruptions to your income by purchasing life and disability insurance. This will ensure that your child avoids the possibility of financial hardship or poverty in the event that you’re unable to work due to an injury or even death.
In addition, a will – something that is often neglected by new parents – becomes an absolute necessity. If tragedy strikes both you and your spouse, you need to have a guardian in place who is willing to raise your child. You may also want to establish a living trust so that your assets are properly managed by a third-party until your child is ready to fully inherit them as an adult.
Building your savings prior to the birth is another important step. Ideally, you should have enough saved to cover least three months of your family’s expenses, including all bills, food, diapers, formula, and other costs. This will give you a financial cushion in the event of an unexpected illness or disability.
Macabre events are not something new parents – or any parents – want to consider. However, being responsible means preparing for the worst while hoping for the best. Once you have taken the necessary steps to adequately protect your child from serious financial risks, you can enjoy life with the newest member of your family. And you’ll have the peace of mind of knowing that, regardless of the circumstances, he or she will be cared for — both physically and financially.
Pathway Financial Planning specializes in helping expecting parents financially prepare for their new baby. For more information or to set up a free initial consultation, contact us at 248-567-2160 or email firstname.lastname@example.org