Congratulations on your pregnancy! What an exciting time. The anticipation of bringing a baby into the world will certainly change your outlook on life and spark a fire in your emotions and feelings in ways you’ve never experienced before. Whether you’ve been preparing to have a baby for a long time or suddenly hit by surprise, your life changes instantly and you start to look at the world in a much different light. Having a baby brings much joy and there is so much to look forward to. There’s nothing like your initial ultrasound and hearing your baby’s heartbeat for the first time, the anxious excitement of telling your family and friends, the official Facebook announcement, and picking a name, to those first butterflies, signs of a baby bump, and random cravings. However, these feelings are not unwarranted.
Naturally you will also go through feelings of fear, worry, and anxiety. You want to provide a healthy environment for your baby and minimizing stress is a top priority. Aside from health, diet, exercise, and rest, the financial impact of having a baby is most likely a close runner-up in preparing for the birth of your child and the many years that follow. Many questions, concerns and challenges around your money and your baby will begin to arise and it’s important that you take these head-on so that you know what to expect and remain in control. If you’re married, it’s important to discuss these topics with your spouse, assign tasks and make sure you’re both on the same page. There’s no right or wrong answer here. The key is to communicate. You may split duties 50/50 or Dad might decide to take them on solo.
Here’s a list of Financial Duties you may need to take into consideration:
- Managing Spending and Budget - If Mom is working, it’s likely she will only get 50-70% of her monthly income while on leave. This could put a strain on your budget so be sure to make the appropriate adjustments. Like anything the better you plan for it, the more prepared you will be.
- Paying Bills – If Mom usually handles the bills, Dad you may have to step it up a notch in this area, even if you’re not the “money person” in the relationship. Mom needs her rest and is making a lot of sacrifices, physical, mentally and emotionally. You should be too.
- Review Medical Insurance and Benefits - How much will it cost? Routing doctor visits, blood tests, lab work, delivery, etc. can add up which is why you have to do your research. Contact your insurance provider to find out what procedures and visits they cover and what will come out-of-pocket. The doctor’s billing staff will likely be able to provide some kind of estimate or point you in the right direction.
- Flexible and Health Savings Accounts – If your employer offers these to you be sure to learn what they entail and how they might fit into your financial picture. There may be tax advantages which can cut down on the total cost of some of your medical bills. Basically you elect a portion of your paycheck (ie: $50) to go to this account which is tax deductible, and then you can use the funds to pay for your medical expenses. Be sure to discuss the tax implications with your Accountant. If you already participate in one of these programs, don’t forget to use them.
- State Disability – Visit your state’s Department of Insurance website for details of what types of benefits are available to you.
- Review Life Insurance – This is a good time to review your group and individual life insurance policies so that your family is protected
- Review Disability Insurance – Many people overlook this. Essentially you are insuring your paycheck and the ability to earn income. Think about it, if you were to become sick or hurt how would you pay the bills, fund your child’s education, retirement, and other goals? Where would the money come from? Many people think the government will assist, but be careful because the government programs in this area are very strict and it is difficult to qualify. If you have existing policies, contact your provider to see if they cover pregnancy.
- Consider a Living Trust – Another one that often gets overlooked. A living trust is more than just protecting your assets (which you may or may not even have at this point in your life). It keeps your financial life private, avoids probate and includes your Will and Healthcare Directive (who you would want to make your medical decisions in case you were unable to). Find a trusted Attorney in your area that specializes in Estate Planning and Trusts. I’ve seen cost average around $800 - $2,500 for a basic Living Trust. It’s money well spent!
- College Savings Plans – There’s a good chance you want your child to go to college. Start learning about the various ways you can save. Education costs have grown by about 6% per year over the last decade. If costs continue to grow at this rate, a $10,000 tuition today, would cost approximately $28,000 eighteen years from now! Not to mention room & board, books, computers, food, etc. Do your research and get started early.
- Money and Marriage Night – Couples should set time aside to discuss their money on a regular basis, whether there’s a baby on the way or not. With money-related issues being the number one cause of divorce, make sure you develop a system to communicate regularly regarding your goals and expectations around money. Kind of like “dinner and a movie.” Divide up your responsibilities, set deadlines, and report to each other weekly on the status. Use a calendar or decide on a day of the week and specific time to have a weekly money date. It doesn’t have to be an hour long meeting. 5-15 minutes should be plenty of time for a quick update on pending and completed items.
This may seem like a lot to think about. That’s because it is! Have you ever heard someone say having a baby is easy? The key is to break these activities down into pieces, prioritize them, and focus on one thing at a time. If you try to tackle them all at once it could be overwhelming and you could create more stress, which is what you’re trying to avoid in the first place. If you work with a Financial Planner, leverage his or her time and expertise as they can help and educate you in a lot of these areas and lighten your burden.
The next several months is going to be a crazy, awesome journey for you. Don’t be afraid to ask for help and learn as much as you can. Stay organized and develop a plan of action. Mom needs to be healthy so that she can deliver a beautiful, healthy baby. Dad be aware of Mom’s needs and be extra attentive. Last but not least, don’t forget to read the baby books!
*This content was written and prepared by Daniel Pichardo, CFP®, CRPC®.
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