Financial things to consider when expecting a baby

Financial things to consider when expecting a baby

March 08, 2019

So one of my best friends is having her first baby! I am very excited for her for so many reasons, and I admit-one of them is selfish. Since having my two boys 4 years ago life hasn't been the same. I no longer go to the "adult only" parties, my husband and I no longer go to see movies at the theater (that used to be one of our favorite activities) and "me time" has turned into "Mommy-I need...". So excuse me if I want all my friends to be in the same boat as me. Because, as we #working moms know, until you've lived it, it's hard to comprehend the changes that come with motherhood. Am I right? 

The birth of your first is really profound though, I remember when Ben was born my husband and I were those helicopter parents you read about and think "Oh, I will NEVER be that parent!". Just you wait! Those first 2 nights at the hospital I remember feeling like a train hit me and I was completely unprepared for what lay ahead. We tracked every feeding, to the minute and ounce and every diaper change. We checked his breathing constantly to make sure he was still ok! I am known to kill plants (typically I either over water or underwater) so I had nightmares going into motherhood. Luckily since then we have figured it out and with the help of my mom friends and my family we have managed to raise our boys to this point.

One thing I'll tell you is as scary as motherhood is it forces you to get your *stuff* together. So what do I mean by that:

1. If you haven't got a budget yet, now is the ideal time to get one.

They say the average cost for the first year with your new baby is $13,000. That of course depends on where you live and very importantly if you have family that will be helping watch your new bundle of joy. Daycare in my neighborhood for full time (if you are a working mom) is anywhere between $15,000 to $21,000. That puts a little dent in your household budget! 

2. Life insurance 

Once we became parents, it became very clear that this little human being depended on us for EVERYTHING! I mean, he couldn't walk, talk, bathe himself, nothing. If something ever happened to us the least we could do was make sure there was money set aside to take care of our boys and get them an education, the rest I leave up to the guardians to figure out. Of course I get scared and sad thinking about the possibility of death like anybody else, but I am a financial planner-I plan for the good things in life, and the things I pray never happen to me or any of my clients. But just in case, I'm covered.

3. Education savings

I grew up in a family where education was highly valued. I remember my parents always said "As long as you have your education, you will never have to rely on anyone for anything". I am glad I took their advice and continued my career after having my kids, I love what I do and wouldn't change a thing. I also value the financial support I got as I pursued my bachelors and masters. 

I look at my sons and I recognize that most of us live in abundance. Toys are cheap and prevalent. I grew up having one Barbie and I had to share her with my older sister. If you had to guess, do you think I valued the Barbie more than my sons value all the toys that are cluttering their shared bedroom? 

Based on my personal experiences I decided to open a college account for Ben once he was born (and now for Aydin too). The reason I like the 529 college savings account idea is two fold:

1. Tax advantages and higher potential growth than having the money sitting in a bank account. And the next time your child has a birthday, send a link to all your guests and family that you'd prefer a contribution to their college account than another toy you don't need. 

2. It's a gift that can keep on giving. Hopefully by the time my kids are college age, I'll be able to surprise them with a big lump sum that's available for them to pursue their education. It's the gift of knowledge, empowering them to pursue their passions in life and become productive members of society. It goes along the lines of "Give a man a fish, and you'll feed him for a day. Teach a man to fish, and you've fed him for a lifetime."

This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions. 

Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing; specific plan information is available in each issuer's official statement, which can be obtained from your financial professional. Be sure to read carefully before investing.

There is the risk that investments may not perform well enough to cover college costs as anticipated. Also, before investing, consider whether your state offers any favorable state tax benefits for 529 plan participation, and whether these benefits are contingent on joining the in-state 529 plan. Other state benefits may include financial aid, scholarship funds, and protection from creditors.