Adding a new member to your family will change just about every facet of your life. Most importantly, it means you have to adjust to an entirely new financial reality. Having a child can be quite expensive, and it doesn’t end until they’re financially independent.
Before you have a child or during the early stages of parenthood, it’s essential to get your financial responsibilities in check to ensure that you and your children can lead secure and worry-free lives. Here are the most crucial financial milestones you need to prepare for in your life as a parent:
Tackling your debt
You should settle all your debt before you think about having children as much as possible. Managing your debt while also handling all the expenses that come with childcare will be difficult but not necessarily impossible. Besides childcare, tackling your high-interest consumer debt should be of utmost priority. This includes mortgage loans, credit card debt, or personal loans. Meeting this milestone will free up more of your money, which should be used to provide for your child.
Comprehensive health insurance
Expect to make plenty of trips to the doctor before your child is born and during the first few years of his or her life. From the baby’s delivery to regular check-ups, hospital visits can be incredibly expensive, so you’ll need to make sure you purchase comprehensive health insurance to keep you and your family safe and healthy. It can be quite costly to pay out of pocket, so it’s a financial milestone worth saving for.
There’s no telling when an emergency can happen. Whether it’s a broken computer or a visit to the emergency room for high fever, you’ll need to have an emergency stash of cash on hand to take care of these things when they inevitably happen. Depending on your needs and circumstances, your emergency fund should be worth at least three to six months’ worth of expenses or more.
Prioritizing your retirement fund as early as possible ensures that you’re prepared for the future. It lessens the burden of responsibility on your child to support you later in life financially. Make the most out of your retirement funds and start saving even before your children are born to guarantee that you and your children have nothing to worry about when you’re much older.
With rising tuition fees every year, the question on every parent’s mind is how they’re going to pay for their child’s college education. But that’s not the only thing you need to be thinking about. You should also take into account childcare, preschool, middle school, and high school expenses.
It can be a lot to handle, but you don’t need to have all of it figured out once your child is born. All you need to do is take it one step at a time and start putting a little money aside for each school year. When it comes to college, you also have the option of contributing to a 529-plan, which will help you out in this area.
Reaching these financial milestones ensures that you and your family are destined for a secure and sheltered life in the future.