5 Key Financial Planning Steps for Families

Daniel Sherwin is a single dad to 2 kids.  Recognizing that there aren’t a lot of resources out there for single dads, he developed his website DadSolo to provide support and resources to single parents. 

 For new parents, every day seems to bring new challenges. This is especially true when it’s time to pay bills. Even though most parents anticipate that a baby means added expenses, adding up all of the additional costs can be overwhelming at first. From paying for diapers and doctors to outfitting the nursery, it’s easy to feel like you’re struggling to stay on top of your finances. Balanced Birth Support knows this joyful time brings a few bumps along the way, but with the following insight, new moms and dads can take charge of their financial situation. 

Adjust Your Budget

Now that your family has grown by one, you will need to revise your budget. For new parents, this is the first step to smart financial planning. 

Prepare to spend a couple of hours going over all of your expenses and income, and consider where you could cut back and where you might need to spend more for the sake of your child’s well-being. For example, perhaps you could make efforts to lower your utility bills but spend more on road trips to see relatives to enjoy more time with your loved ones. Prioritize your spending carefully with your new circumstances in mind.

Consider Your Child's Future

Your death probably seems like a remote possibility right now, and estate planning can feel like a complicated and depressing process. However, new parents should decide how they want their estate managed in the event that something happens. Plan to meet with a lawyer to write your will and appoint a guardian, and start researching term life insurance policies to find a plan that will be suitable for your family. 

Why is taking out the right term life insurance policy so important? Basically, this policy will provide coverage for all sorts of expenses if you pass away, including funeral arrangements and unpaid debts. In addition, term life insurance can make up for lost income and help cover the cost of college tuition fees.

Open A Flexible Spending Account

If your employer gives you the option to open a Flexible Spending Account, it’s wise to take advantage of this opportunity. How does an FSA work? According to Pekin Hardy Strauss Wealth Management, you can make contributions up to a certain limit with pretax dollars and spend the tax-free withdrawals on qualifying healthcare expenses and childcare. 

However, before you open an FSA, you should know that you do have to spend all of these contributions in one year. But if you’re making regular payments for healthcare or childcare, opening an FSA can be a smart way to save on your taxes.

Increase Savings Contributions

New parents may find it difficult to increase their savings, but it can make a huge difference for the quality of life in your household and your child’s future. Consider asking for a raise and putting the additional income directly into savings. You can use different types of investment accounts to save. 

Is your family enrolled in a high-deductible health insurance plan? CNBC recommends opening a Health Savings Account to pay for medical expenses and save big during tax season. And even if your employer offers a 401(k) retirement savings account, you could also open an IRA to increase your yearly contributions. 

Furthermore, you should strongly consider opening a 529 savings account to start preparing for your child’s education. It may be years away, but high school graduation day will be here before you know it! 

Don't Forget About Your Small Business

Raising a child and operating a business can be a very overwhelming prospect. However, it’s important to spend time taking care of your small business to ensure that it continues to grow and operate smoothly. For example, if you’re just starting out, you’ll need to register your business with the state. Not only does it legitimize your business, but it also helps keep it separate from your personal finances, which can help protect you should something go wrong. Additionally, keep up with your quarterly tax payments to avoid costly late fees, and make sure you’re keeping a close watch on your business’s finances every day. It may sound like a lot of work — and it is — but doing so will help ensure that your business continues to provide for your family.

As a new parent, you’re learning to put your child first and consider their needs with every decision you make. When it comes to financial planning, this should be your guiding principle. When you establish new practices for spending, saving, and investing with your child’s best interests in mind, you can rest assured that you will be able to give them a comfortable, secure life. 

There’s nothing quite like being a new parent and experiencing the joy a baby brings. Single parents can experience unique challenges in raising a family.  Adjusting to this new chapter can present challenges at first, and this is normal. Our doulas not only provide birth support, but also support postpartum and can help you navigate the challenges of parenting. Need a nanny or sitter? Visit our sister company, Knock Knock Nanny to talk about the kinds of support we can provide.  We are here to support you in your parenting journey. 

Author: Renee Corbino

Renee keeps Balanced Birth Support organized and amazing as the Administrative Manager. She lives in Sarasota, Florida with her husband and two cute little boys. She is a breech birthing mama and supporter of empowering births.

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