Personal Finance

Planning for parenthood: Put financial planning on your to-do list

Nolan and his wife decided they don’t want to know the baby’s gender in advance but still wanted to make an announcement. This was their solution. Planning for the financial implications of the baby is high on their to-do-list.
Nolan and his wife decided they don’t want to know the baby’s gender in advance but still wanted to make an announcement. This was their solution. Planning for the financial implications of the baby is high on their to-do-list.

My wife and I are in the middle of our first pregnancy and we have been overwhelmed with a statement many make.

“Having a baby can be expensive.”

So I’ve asked myself: “What makes the birth of a child so expensive?” and “How can we plan ahead?”

While I know we may not ever be fully prepared, we have items we can check off our to-do list.

Here are a few first steps all parents-to-be can take to help plan for the birth of their child.

Understanding your employer’s benefits

An easy first step is to schedule a visit with your employer’s human resource department to better understand health insurance benefits, short-term disability coverage for maternity leave and potential paternity leave that may be available to you and your spouse. Your HR Representative may also share when you are expected back in the office and whether you will receive a portion of your pay while you are on leave.

If you’re adopting, employers may also have coverage related to those costs, including a maternity and paternity leave policy.

After you understand all your benefits, it may help you narrow the search for a physician and help you plan for the expenses, such as deductibles, that could be out-of-pocket.

Creating your pre- and post-birth budget

In addition to understanding your employer’s benefits, you may be wondering how to determine what additional ways your income could be affected.

A good place to start is to evaluate the inflows and outflows of your current budget. If you do your homework, you can estimate upcoming expenses such as daycare, diapers and food, then add those items to your budget.

As my wife and I approach this next chapter, our stress is not the only thing that is growing. Our baby shopping list has grown, too, so we’ve had to take a closer look at which items we consider necessary expenses to add to our pre- and post-birth budget.

After the baby arrives, we know that we’re likely to have some unexpected additional expenses, but we can adjust our working budget as needed.

Starting the difficult conversations

As you prepare for your upcoming arrival, you may find that certain items on the to-do list are difficult to discuss. Consider putting in place life Insurance, disability insurance, guardians and other estate planning documents.

Planning for the worst may be the best thing you can do for your child and having those difficult conversations now may get you a step closer to feeling more prepared. You may find it beneficial to consult with a wealth adviser and other professionals to help draft the policies and documents that you may need after your baby is born.

Establishing an emergency fund

Do you have a plan in place for a financial emergency? With a baby on the way, accidents may happen. Establishing a fund prior to your baby’s arrival will prepare you for whatever life may throw your way. A good way to grow your fund is to consider adding extra savings to your budget.

Setting goals and looking toward the future

At least for me, it’s hard to imagine now that our child will one day potentially go to college or get married. It can be difficult to look that far into the future.

Setting goals and coming up with realistic steps to achieve those goals could be rewarding for both you and your child. Whatever the goal might be, it is never too early to start planning and saving. It could be helpful to discuss your goals with a wealth adviser to put a plan in place.

Getting excited to tackle the next chapter of life

You may realize very quickly that there are many added responsibilities that come with having your first child. Start small and prioritize the most important items on your to-do list. It may seem overwhelming at first but may be rewarding as you welcome your child.

Nolan Keim is an active member of the Financial Planning Association of Greater Kansas City. He currently serves as a client service associate for Mariner Wealth Advisors in Overland Park, Kansas.

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