My wife and I recently welcomed our first child into the world, and there are no words to describe the love that we feel for our daughter. We have been parents for almost two weeks now, and it is certainly better than advertised! Over the past few months, we have been having conversations about how to best plan for the future now that our little one is here - and thought this a good time to share some of the topics we've discussed that any new parent should consider.
- Update important documents
- Create a will - Not only will this allow for you to leave instructions for the distribution of your property should something happen to you, it gives you an opportunity to name a guardian for your children should the need arise. Wills also allow for you to plan financially for the future. Creating a trust allows you to designate a specific purpose for your assets - be it education funding, establishing a monthly stream of income for your children, and so on. Trusts also allow for your assets to avoid going through probate, a lengthy process for most estates
- Update your beneficiaries - It's surprising how many married adults with children still have their parents listed as beneficiaries on old 401(k)s or insurance policies. The birth of a child is a great time to make sure that your beneficiary information is up to date.
- The birth of a child is one of the few opportunities, along with marriage to consolidate healthcare insurance plans. It's important to evaluate your employer-sponsored insurance plan along with that of your spouse to see which plan is best for you. A newborn is going to go to the doctor, and often - there's no way around it. A high-deductible plan can get expensive in a hurry if you are paying out of pocket up to a certain level.
- Life insurance - How will you provide for your family if something happens to you or your spouse? Life insurance can provide for income replacement, along with the ability to pay off large debts, such as a mortgage in the event of your death. Life Insurance is a great way to remove this burden.
- The cost to attend college is not cheap. Consider the fact that your newborn won't be attending college for several years, and inflation is going to hike tuition costs even further. A 529 College Savings Plan is an excellent way to save for college now, and provides a tax-savings benefit in most states as well.
- Changing diapers isn't much fun, buying them is even less enjoyable. Many newlyweds still operate with multiple bank accounts. Having children is an excellent time to consolidate bank accounts to more accurately monitor your spending habits, and makes it much easier to stay in control of your finances.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).