Exciting times are coming for Integritas Financial. I will be greeting my first child within the next month! Like any expecting parent, I am flooded with emotions and doing my best to plan for the new chapter ahead. The most common advice I hear from people is that there is nothing I can do to be prepared for what we as new parents are about to face, but it is also the best experience of our lives. Katie and I are extreme planners, so we have been reading and watching YouTube videos every day to build some expectations. But, I have learned there are some things we won’t be able to control. I am a firm believer in not stressing about things I can’t control and to focus on what I can control.

In this article I will lay out some things I am doing, within my control, to plan for a new addition to the family. This should make it clear that financial planning is for every stage of life. In fact, the earlier you start to develop a financial plan, the better.

Add baby to health insurance plan

After you have the baby, you are most likely going to want to just stare at it for days. Unfortunately, you may have to a few moments to call your insurance provider the day of birth to add baby to your insurance plan. Some plans allow you to take care of this within the first 30 days of birth to provide retroactive coverage, but I advise calling your provider ahead of the delivery date to see what their policy is.

Update or draft a will

The majority of adults in the U.S. do not have the simple estate planning documents such as a will or living will completed. These documents are very inexpensive and easy to complete if you work with the right estate planning attorney. A will is not just for leaving your belongings to your surviving family, but is also they way for you to name a guardian for your child if something happens to you and your partner. Don’t miss this chance to get your affairs in order and be prepared for the unexpected.

Life insurance – Term

No one minds talking about a new life, but talking about death is an uncomfortable topic especially when your thinking of a new child. But your new child is the reason you need to prepare for an untimely death. If you are the sole income earner, your family could be in a tough spot if you don’t prepare with life insurance. Term life insurance is a small addition to your monthly budget, and you’ll have peace of mind knowing that your family will be ok if something happens to you.  It’s a good idea to get a quote on disability insurance if you work in a trade while speaking with the insurance broker.

Revise budget

After you have bought all the baby gear, you should create an anticipated budget based on future expenses of raising a child. Include things such as added grocery bills, health insurance, day care, education (e.g., private school, college, grad school), clothing, etc. Over time children will become more expensive because they consume more as they grow towards teenage years. If you plan on paying for a wedding down the line, you may incorporate that into your savings goal. Like I keep saying, the sooner the better.

Build extra emergency savings

Because of the adjusted budget you will need to keep more in your emergency fund. This is important if one of the income earners in the family loses or leaves their job and must forego 3 to 6 months without that income. This is one of most important buckets of money to have funded at all times as insurance for emergencies.

Education Planning

This is also considered part of the budget, but a great vehicle to use for education planning is the 529. These accounts can be funded with gifts to the child up to the annual gift tax exclusion. $16,000 for each parent in 2022. The best part of these accounts is the investments grow tax-free and are not taxed if used for qualified education expenses. This is a huge benefit which allows you to pay tuition with after tax dollars.  Some states even offer state tax deductions for contributions to 529s. Check this link to see if you live in a state with this benefit.

This isn’t an exhaustive list of things to do but it’s a good start. For help with all of these points set up a call with Ryan Kaysen at Integritas Financial.

Fiduciary Mission

At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.

We believe in transparent, client-focused service that puts your financial goals at the center of everything we do. As a fiduciary firm, we are dedicated to acting in your best interests, and we never sell products that charge commissions to clients.

Our goal is to help you achieve a stable and prosperous financial future by providing comprehensive financial planning services that are tailored to your individual needs. Whether you're just starting out in your career or you're already well-established, we can help you navigate the complexities of financial planning and create a roadmap for success.

Ryan@if-money.com