The arrival of a new family member represents a major change to a lot more than just your finances, it's a change to your entire life. So it is understandable if your budget isn't the first thing that is coming to mind right now. However, it is important to make sure you are financially prepared for your new addition, and these tips can help ease some of your financial worries and allow you to put more time into your growing family.
Re-evaluate Your Budget
Your expenses are about to undergo a lot of changes, so there is no time better than the present to evaluate your budget and see where you can cut costs in preparation for the newest addition to your family. Make a list of all the new expenses you will encounter with your newest child and see how they fit into your budget and what you can change to keep everything running smoothly. This will also give you an idea of how much you can afford to spend on the new child, despite how tempting it may be to buy top-of-the-line products for them.
Decrease Your Debt
It's something that you should do even if you aren't expanding your family, but decreasing and eliminating your debt becomes even more important as a child enters the picture. There are two common kinds of debt you can work to decrease immediately.
- Credit card debt can quickly compound month over month if you are unable to pay off your entire balance. Paying off the balance each month should become a priority, but if you are unable to do so, then contact your credit lender to see if you can get a lower interest rate. It never hurts to ask.
- Student loans can be crushing, especially for younger families preparing for a new addition. Try refinancing your student loans to combine them into a single monthly payment. It could save you thousands of dollars a year.
Get Good Insurance Coverage
Life insurance becomes even more important as a child enters the picture, as you need to make sure your family is prepared for life without you or your partner. Take some time to review your life insurance policy and make sure it fits your needs. Also, remember to add your new little dependent to your health insurance plan.
Evaluate Your Emergency Fund
It's good practice to keep a minimum of three months of your household expenses saved in an emergency fund in case your income suddenly stops. When you add a child to the mix, those monthly expenses will inevitably rise. Re-evaluate how long your emergency fund can last you with the new expenses and make sure it's ready for the new child's arrival.
Save for School
If you got some use out of the student loan advice above, then you probably know that education isn't cheap. The sooner you start saving for your child's education, the better off you will be. The most popular way to go about this is a 529 college savings plan, but if you want flexibility in case your child doesn't go to college, using Certificates of Deposit or depositing the money into a brokerage account could be a better option.
There are many paths you can take to help support your family financially, but make sure you stay realistic about your goals and open with your partner about the current financial situation. A child, whether it's your first or fourth, is a big change to your finances and the more prepared you are for it, the better off you will be.
If you are burdened with high amounts of credit card debt and are struggling to make your payments, or you’re just not seeing your balances go down, call Timberline Financial today for a free financial analysis.
Our team of highly skilled professionals will evaluate your current situation to see if you may qualify for one of our debt relief programs. You don’t have to struggle with high-interest credit card debt any longer.