Parents-to-be can take several important steps to prepare their finances before their little bundle of joy arrives.
Evaluate your current finances - Add up your monthly income and make a list of monthly expenses. Use the online tool from your bank to track your spending and make adjustments.
Reduce your household debt - Take a look at all of your credit cards, lines of credit and loans to determine how much of your take-home pay is spent paying off debt. Pay the maximum on your lines, loans and cards each month. An option for many people is to consolidate debt. Your banker can help you to assess your specific situation and provide options.
Develop a savings plan - Cribs, changing tables, new clothes, bottles, diapers and other supplies are just a few of the costs you can expect to incur. To make saving easier, have the funds automatically deducted and placed in an interest-bearing account. Remember to set up an “emergency” savings fund too.
Start saving for college - There are many options available including state-sponsored college savings programs and an educational IRA. Talk with your banker or financial advisor to determine the best option for your family.
Review your insurance coverage - Life and disability insurance are essential. Insurance proceeds can cover day-to-day expenses, future college debt, car loans, a mortgage and many other expenses facing the family. A trusted banker can help you find a qualified insurance agent.
Don’t forget health insurance. Many companies allow you set aside pre-tax dollars to pay for specific expenses such as doctor office visits, prescriptions and daycare so ask your employer about these accounts.