BOSTON (CBS) – Expecting a baby makes people view the world differently. The transition from couple to family requires a fresh assessment of all aspects of your life. Along with the joy and excitement, there is a long list of new responsibilities to consider.
In doing my research I found that Fidelity had a great article on financial planning for new parents.
- Review your health insurance. What kind of pregnancy coverage do you have? Will you have any out of pocket expenses to contend with? Co-pays.
- See if your employer offers any perks. Parental leave is 8 weeks here in Massachusetts. That’s for the birth or adoption of a child. A flexible spending account (FSA) will become more important once you have children. Look in to life and disability insurance your employer may offer.
- Pay down debt. Babies are expensive. According to the Department of Agriculture a child will cost $245,000 to raise until age 18. This does not include a college education.
- Beef up your Emergency Fund. With children, there are always going to be emergencies. A quick trip to the ER always looks so easy on TV but many medical plans cover very little of an ER visit. A copay could be $50 to $150.
- Budget for baby time. The Family and Medical Leave Act allows for time off but not always with pay. Get ahead of the curve here and start to save now so you have a cash stash so you can take some time off. Also, save vacation and sick time if your employer will let you.
- Determine child care costs. A 2015 study by the Economic Policy Institute found that Massachusetts ranks second in the nation for having the most expensive infant care. The average annual cost of infant care is $17,000 and once the kiddo is out of diapers it averages about $13,000 per year. That is twice the cost of tuition at UMASS Boston.
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