- Posted January 4, 2023
Aspects of Financial Planning New Families Should Know About
If you’re preparing to grow your family, you should know that it will take some financial preparation and adjustments. Having children brings so much joy and fulfillment, but it also brings a lot of financial responsibility as you’re caring for them. Here are a few aspects of financial planning new families should know about according to our certified financial planners in Hartford, CT.
First, you’ll need to consider your insurance needs as you’re preparing to welcome a new child (or children) into your home. One of the most pressing insurance needs that you’ll have will be health insurance. A newborn baby has lots of doctor’s visits and treatments that can quickly become expensive if you don’t have health insurance to help offset the cost. Remember, if you meet low-income cutoffs, you might qualify for Medicaid or CHIP, which are provided and paid for by the government. You also might want to provide your child with life insurance. As an expectant mother, you can also apply for short-term disability insurance to help cover some of the expenses of your maternity leave if your employer isn’t providing you with paid leave or sufficient time off.
Next, keep in mind that your taxes will change once you have children. Since you’ll have dependents that you’re responsible for, you might have more tax breaks and write-offs. For example, you can get an adoption tax credit of up to $14,890 in 2022. You can also receive a child tax credit in the form of a tax refund that accounts for up to $2,000 per child. Make sure you update your tax status to reap the financial benefits of having children. Our certified financial planners in Hartford, CT can provide financial and tax planning services.
Increase Your Savings
Finally, as you’re doing financial planning after having children, make sure that you increase your rainy-day, emergency savings account. Up to this point, you’ve probably been budgeting to have a few months' worth of savings in your account to buffer your expenses in case of an emergency. However, your weekly and monthly expenses will increase upon having a child. Now, you’ll have to pay for additional food and supplies such as diapers, formula, baby wipes, and more. So, you’ll need to adjust your budget accordingly, but you should also try to increase your savings. This will help you to be able to afford any financial surprises your new baby might bring.
So, if you’re planning on having or adopting a baby soon, remember these aspects of financial planning for new parents. You should be accounting for the costs of insurance, taxes, and increased savings. This will help you to be more financially prepared to grow your family and welcome a new precious baby.
Did you enjoy this article? Here’s more to read: How to Keep Wealth in Your Family