The birth of your baby is the perfect time to review your financial life. You want your loved ones cared for if something were to happen to you or your partner, and be in the know regarding benefits and savings options available for your new bundle of joy.
I am sure you and your partner put a lot of time and research into what went on your baby gift registry, and read every review under the sun regarding car seat safety, and what perfect shade to paint the nursery. Wouldn’t you agree that you should plan to keep your little one financially safe and secure?
In this post, I will summarize a few things to consider when re-evaluating (or starting) your plan after baby arrives.
Life insurance
Think worst case scenario. If you or your spouse were gone tomorrow, would your financial life go on without any issues? While entirely possible, this would put most families in a very difficult living situation. Think about your daily living expenses, and include all the new costs of child care, feeding, schooling, etc. Now do you think you’d need some assistance? Term life insurance is a great and cost effective way to protect temporary needs like replacing a lost income due to death, paying down a mortgage, and helping with child care costs, just to name a few. We can help you put a plan in place, and get the best rate for your life insurance.
Disability insurance
Make sure you know what your long-term disability coverage is through your employer benefits plan. If you do not have this coverage through work, you should look into getting some on an individual basis. For the same reasons noted above, if an income earner in your family was no longer able to work, and did not have any form of disability insurance in place to replace the lost income, you could be in a similar financial position as if that spouse passed away. Disability insurance is more expensive than life insurance, but that is because statistics say that you have a 1 in 3 chance of being disabled in your lifetime. Your chances of being disabled are significantly higher than dying prematurely.
Wills and Powers of Attorney
Most young couples don’t have a Will. While it may not be entirely necessary if everything you own is in joint name with your spouse, we highly recommend you write and keep your Will and Power of Attorney up-to-date – especially given the birth of a new baby. Your will sets out who would be the guardian(s) of your child should both of you die. Without a will stating your wishes the courts will decide who will raise your child. The will also sets out who will manage your remaining assets for the benefit of your child. As you can imagine this is a life-changing decision for your child. And be sure to ask the people you appoint guardians and trustees if they are willing to serve.
When your Will is set up properly, you control who receives your assets and money. Without one, the courts decide who gets what. This can result in large legal bills for your family when disputes arise and ultimately your wishes may not be fulfilled.
Other considerations
Have you thought about whether you want to save for your child’s eventual post-secondary education? Do you know the best way to accomplish this?
Significant government grants are available but not all plans are created equal. Beware of companies that approach you right after the birth of your child and read ALL the fine print. Many charge high fees up front – it’s buyer beware.
Are you aware of all of the tax credits and benefits that our government offers parents, and how this does or does not affect your taxes?
In closing, there are many things you should consider and plan for when you bring a baby into the world. You can plan ahead, before the baby is born, but if you wait until he/she arrives, it is even more important to make this planning a priority.