Smart Money Moves for New Parents: Protecting Your Growing Family's Future

If you are welcoming your first child into your home, chances are that your world is about to undergo drastic changes! From a new bedroom and altered meal plans, to how you shop, sleep, or enjoy relaxation, every aspect of life is probably upside down as you adjust to a new “normal.”

One thing that may not be on the top of your mind, however, is how your finances will change. But this doesn’t mean it isn’t crucial to consider how a growing family can mean altering financial plans. Let’s walk through some of the differences you may want to weigh as you become a first-time parent.

Changes to Insurance

One of the first considerations you want to make is to change your insurance coverage. Did you know that your child will need his or her own life insurance policy? Yes, even children, of any age, should have their own policy. If for no other reason than to cover the cost of a funeral, cremation, or burial, every person should have a policy.

Additionally, you may want to expand your policy. You are now responsible for another life! This means that if you were to suddenly be gone from this world, others would be left at a loss. Becoming a parent means changing your mindset. You are no longer responsible for just yourself and/or your spouse, and you need to make changes to reflect that.

Update the Household Budget

Your household budget will need to shift with the expansion of your family! Depending on your unique family circumstances, you may have medical bills from labor and delivery. You may have had adoption fees or foster care considerations. Whatever way your family was blessed to grow, chances are there is a cost involved.

Additionally, things like the food budget, home heating or air conditioning, insurance costs, and typical monthly bills may go up. Some change gradually, while others will be an immediate need. Monitor your new spending habits and keep tabs on the budget.

You may have also had to take time off from work for your new family member to be welcomed into the household. This parental leave may have been fully paid, partially, or not at all. Take this alteration of income into consideration, too, when financially planning for this change.

Starting a College Fund

If there is one regret I hear about college funding from parent clients, it is simply that they wish they’d have started sooner. If you are a brand-new parent, now is the time to get a college fund going. Even if your child decides on a different path other than higher education, having savings to help them start their adult life can make a huge difference.

Build Your Emergency Fund

Much like your life insurance policy considerations, you also want to be sure that the safety net of having an emergency fund is taken care of ASAP. That life you're responsible for, beyond your own, requires stop-gaps to ensure that life is safe, financially secure, and protected. 

An emergency fund, which can cover immediate bills in the event of any accident, unexpected job loss, or change in financial circumstances, can come in handy. From a broken washing machine to a house fire, you never know what accidents may come. Be financially prepared for your growing family with a solid emergency fund of around two months of your typical budget.

Is Being a Stay-at-Home Parent an Option?

Here’s another major financial decision: Many new parents also weigh the pros and cons of a stay-at-home parent. While it is an amazing choice to stay home to raise young children, especially, it isn’t always financially feasible for all.  Read more on the option in my blog here.

We’re Here to Help You Find a Balance!

Financial planning is never static. No one can set a path in stone, assuming it will fit their needs throughout all of life’s stages.

Instead, a financial plan must remain fluid and flexible. My team can provide guidance, planning, and follow-through. I’m always happy to help a growing family formulate their best path forward for their finances! 

Reegan Rehm, and Rehm Insurance and Financial Services are independent of, and not affiliated with, The Lincoln Investment Companies. Insurance products are not offered through The Lincoln Investment Companies.