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And Baby Makes Three

March 09, 2017
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Your bundle of joy has arrived. You have all the cute little clothes, safest car seat, a bassinet, and everything else that is necessary. Right? Well, maybe not. After the planning to have the baby (checking your medical insurance coverage, planning on your leave from your job, figuring out day care arrangements, etc.), there may be some basic financial planning that is needed. Here are some of the things that you should consider. Note that this is not intended to address some of the immediately pressing practical issues (how to change a very messy diaper, how often grandparents will be visiting, should we enroll baby Einstein into the local Montessori school immediately, etc).


DO WE HAVE SOME MONEY SAVED IN CASE OF EMERGENCIES? Money isn’t everything, but it sure helps when the heater breaks. Most couples having children are paying a mortgage or saving for a home, which is great. Try not to leave yourself without options if there is an emergency. Saving is best, but for an unexpected event, knowing that you have funds available to use from other sources is important.


OBTAIN THE BABY’S SOCIAL SECURITY CARD. Hospital staffers typically provide the necessary paperwork to get your new child’s Social Security number and birth certificate. If not, then contact your state’s office of vital records for the birth certificate and your local Social Security office to get a Social Security card.


MAKE SURE TO ADD BABY TO YOUR MEDICAL INSURANCE! Please don’t wait for the full 30 or 60 day grace period that most plans allow. Not having coverage for your child is just bad news on too many levels. Get a confirmation from your plan that the baby is covered.


GET LIFE INSURANCE FOR YOU AND THE CHILD. If something happens to either parent, it would mean a loss of income for a long time. If the worst happens, then the surviving parent must have the ability to pay off the mortgage and live in a way that allows your child to be financially well. If a tragedy befalls your child, then you will want to handle the final expenses quickly and with the least amount of additional distress. Speak to a professional about this so that your family doesn’t have to suffer the dual pain of emotional loss and economic catastrophe.


CHECK YOUR BENEFICIARIES. You may want to add your child as a beneficiary on your life insurance, 401(k) and IRAs. This is invaluable if something happens to both parents. See below regarding the Will.


DISABILITY INSURANCE. Most people have some disability insurance through their employer. Make sure you have enough coverage to meet your expenses if you’re out of work for several months. If your expenses have risen, then you need to re-evaluate your disability coverage.


CHECK YOUR WILL. In case both parents die, you should consider designating a guardian so the courts don’t have to. Your will is the place to begin your planning. If you don’t have one, get one now.


START SAVING FOR EDUCATION. Enough said. We all know what it costs.


One last thing: Don’t forget to keep funding your retirement! As with college savings, the earlier you start the more likely your success will be.


None of this needs to overwhelm you if you prioritize and ask the professionals who can help.


by Ronald Donato, Jr., CFP®, MBA
Director of Financial Services