Expert Shares a Financial Checklist for New Parents in Viral Video

The moment the two positive lines came across my pregnancy test, I was elated to tell my husband we were expecting a baby. If you know me, I immediately went into planning mode. I asked for all the recommendations to add to my baby registry, and I had a detailed list of what to pack in my hospital bag. But I will tell you, there were other lines I wasn’t excited about, and they were all pointing straight to my bank account. Suddenly, all I could see were dollar signs. Welcoming a baby is exciting, but it also means you may find yourself wondering how to financially prepare for a baby.

While I wanted to throw the thought of financial planning to have a baby far into the abyss—and pretend having kids is free—it isn’t. Having kids is expensive AF these days. In America, the cost of raising a child averages around $234,000. But where do you start, and what should you take into account when it comes to being financially prepared for a baby? Seema Sheth (@bobeema), a finance expert, recently posted a viral TikTok to help parents with this matter. Sheth’s viral video of a basic new baby financial checklist has over 117K views, over 10K likes, and has been saved over 5K times. Here’s why new and expecting parents are taking note:

The Viral Basic Baby Financial Checklist for New Parents

In the viral video, Sheth—currently pregnant at the time the video was filmed—is taking a casual stroll. She starts the video by saying she’s a finance expert and opens up the conversation with, “I’m going to tell you about some things to think about as you prepare a plan to have your baby.” It’s as if you are two friends on a walk needing mom-to-mom advice on how to tackle the financial responsibility as a new or experienced parent. She then gives the following key points on how to do just that before baby arrives:

Check Your Insurance

Contact your health insurance provider to figure out how much it is going to cost you. Typically, whatever your maximum out-of-pocket is will be the ballpark total cost. Sheth reassures users that if you don’t have that amount of money in an account somewhere, you can “create a payment plan with either your insurance company or hospital post delivery.”

Create Your Post-Baby Budget

Take into consideration new items that weren’t there before, like diapers and other baby necessities. She iterates to write it out.

Know Your Childcare Costs

Factor exactly how much your childcare will cost. Sheth says childcare numbers can change over time. An emergency fund is also beneficial for unexpected costs that may come up.

Be Aware That Your Health Insurance Costs Will Increase

Be aware that you will be adding a ‘dependent’ to your health insurance. The new addition of a child means your health insurance cost can change. Sheth notes, “Costs are going to go up, especially if it’s your first dependent.” Factor in this new cost as well.

Sheth also goes on to say the last two points are so important. Although you can “wait until the first couple of months are over and you’ve like regained a sense of consciousness.”

Have Estate Planning Documents in Place

Be sure to have your estate planning documents in place, including choosing a guardian for your child. This includes a will “so that there’s somewhere for your kid to go if something happens to you.”

Buy Life Insurance

Have life insurance in place. Sheth states, “If something happens to you, there is money to take care of your kiddo if you’re not here to do that yourself.”

Source: Elevae Visuals

Other Ways to Budget for a New Baby

So, we’ve established that having a kid is expensive. There are also a few other ways to ease the financial burden, depending on your employer and where you live.

Childcare

TikTok user @rebeeccastuart4 commented, “Also daycare costs soooooo much more than you think.” Recent data from the U.S. Department of Labor shows that childcare costs per child in one year in America range anywhere between almost $5,000 and $15,000. My first thought—that’s like college tuition. However, you may be able to claim ‘The Child and Dependent Care Credit (CDCTC).’ It is a tax credit that “helps parents and families pay for the care of their children and other dependents while they work, are looking for work, or are going to school.” You or your partner can also reach out to your employers to see if they offer a ‘Dependent Care Flexible Spending Account (DCFSA)’—“a pre-tax benefit account used to pay for eligible dependent care services.”

Maternity and Paternity Leave

TikTok user @mommafitbit mentioned to think about “the cost if not working during maternity/paternity leave, if you take unpaid time, or don’t have paid time.” The American Pregnancy Association advises to “check in with your human resources department to find out the details about your maternity leave options.” Your employer may continue to pay you at a fraction of your salary.

Saving for College

Sheth also adds, “There are also fun and exciting things you get to save for. You know, [like] a college education.” She uses a 529 plan to save for college for her four kids. Two types of primary plans within a 529 can include education saving plans or prepaid tuition plans. Education saving plans are “tax-advantaged investment accounts designed for education savings.” Prepaid tuition plans “let you pre-pay all or part of the costs of an in-state public college education.” Check within your state to see if these plans can apply to you.

If You Don’t Have Health Insurance

What if you don’t have health insurance? Depending on your income, age, and employment status, you may qualify for government programs like Medicaid, Medicare, or the Children’s Health Insurance Program (CHIP).

In January of 2022, the No Surprises Act went into effect, where your provider must provide you with a good faith estimate for any possible charges for your care.

And if you or your partner do not have insurance through your employer, or if either of you have lost your job, resources like HealthCare.gov allow you to shop for your own insurance coverage.

Like Sheth says, “Having a kid is stressful enough.” So having your financial ducks in a row can ease the burden. Hopefully, with this information, you can get a head start on your financial planning for your own family. I can honestly say that a financial checklist for new parents like this was definitely missing in my pregnancy book. The next thing on the list is to figure out how to get this added.

patty schepel the everymom editorial intern

ABOUT THE AUTHOR

Patty Schepel, Editorial Intern

As the editorial intern, Patty works with The Everymom’s team on pitches, creating original articles, updating existing content, photo sourcing, writing shopping product descriptions, inputting freelance articles, and more. When she’s not working, you can find her spending time with her family, training for half marathons—she ran one 16 weeks pregnant—traveling, cooking, reading a rom-com, and keeping her sourdough starter, Rose, alive.

Source link: https://theeverymom.com/financial-checklist-for-new-parents/ by Patty Schepel at theeverymom.com