Having a baby can be one of the most exciting moments of anyone’s life. However, it doesn’t come without its share of potential financial snafus down the line.
I’ve said it before and I’ll say it again: there will never be perfect time to have a baby financially. Quite simply, it’s largely an emotional decision, and it depends on a parent’s readiness much more than their finances. That being said, once you’ve made the decision to have a baby, you shouldn’t ignore financial preparation.
Here are some financial tips for expecting parents.
Don’t forget your own finances
Often parents will get so caught up in setting their child up for success that they’ll ignore their own financial health. That’s why one of the biggest financial tips for expecting parents is to stay on track for their own financial goals.
Investing for retirement, for instance, is something that frequently gets swept under the rug. The truth is that derailing your own financial health often causes more harm than good. When it comes to retirement, your baby will end up having to support you during your golden years if you fail to properly plan for retirement.
Consider investing for education costs
With the rising costs of education, this will likely be the largest cost of having a baby if you plan to support their education financially. By investing for your child’s education in their early ages (or before they’re even born), you can harness the power of compound interest for years to come. So even though paying for your child’s education is years – even decades – down the line, this is one of the biggest financial tips for expecting parents that you’ll have to pay attention to.
There are also some tax-advantaged investment vehicles available for your child’s education that should be strongly considered. A 529 Plan is one these investments, and it allows you to invest your wealth for education costs, and is tax-free federally. Depending on the state you open this plan in; you can take advantage of other benefits, such as also not being subject to state taxes.
Adjust your financial road map
Your investment needs and goals are likely going to change after having a baby, and you’re going to need to adjust your financial road map accordingly. Everything from major financial expenses (like buying a bigger home) to small daily increases in spending (like clothes, diapers, etc.) should be built into your financial plan going forward, and your investment portfolio should be adjusted.
Do you have a financial advisor to discuss your changing goals with?
At LexION Capital, we don’t only meet with our clients one-on-one initially to tailor a bespoke investment plan based on their goals and needs; we also meet with clients whenever they encounter a financial milestone (like having a baby), and help them adjust accordingly to reach their new goals. Interested in learning more? Don’t hesitate to contact us today and see how our services might be right for you.
