Money Moves Every New Parent Should Make

Becoming a new parent is a joyous occasion, but it can also be overwhelming when you consider the financial responsibilities of starting a family. From the cost of diapers to college tuition, it’s important to have a plan to ensure your family’s economic well-being.

In this post, we’ll discuss four money moves you should make as a new parent to protect your family’s future.

Establish a will and trust

One of the most important things you can do as a new parent is to create a will and trust. While it may not be pleasant to think about, planning for the unexpected is critical to safeguarding your family’s future.

A will outlines your wishes for your assets and how they should be distributed in the event of your passing. A trust is a legal arrangement that can help protect your assets and ensure they are distributed according to your wishes through a trustee. Trusts can help manage your assets while you’re still alive.

Re-assess your insurance coverage

As a new parent, you should review your insurance coverages to ensure your family is adequately protected. This includes health insurance, life insurance, and disability insurance.

Life insurance is especially important for new parents because it financially supports your family if you die. It can help pay for funeral expenses, pay down debt, and provide ongoing financial support to your spouse and children.

Disability insurance can help replace lost income if you become disabled and unable to work. Your health insurance will cover expenses for your newborn, like their hospital stay, physician visits, lab tests, and vaccines.

Education planning

College tuition is one of the biggest expenses parents face, and it’s best to start planning early. One way to do this is by starting a college savings plan. A 529 plan is a tax-advantaged savings plan that can help you save for your child’s education expenses.

By starting a college savings plan early, you can give your child a head start on their education and ensure they have the resources they need to succeed.

Establish an emergency fund

Having an emergency fund in place as a new parent is necessary to help you weather any unexpected financial storms. An emergency fund is a savings account to cover unanticipated expenses such as a sudden job loss, a medical emergency, or a car repair. By establishing an emergency fund, you can avoid debt or dipping into your retirement savings.

Create a goal for how much you want to save and a timeline for getting there. Ideally, you should aim to save at least three to six months’ worth of living expenses, but you can also start with a small goal of $500-$1,000.

Evaluate your budget to see where to reduce spending and redirect those funds to your savings account. You can make things even easier by automating your savings each pay period.

The bottom line

These four money moves can protect your family’s financial future and give your children the best possible start in life. Remember, if you need additional financial support, consider a personal loan to help cover unexpected expenses.

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