There’s really nothing scarier than coming home from the hospital — or the adoption agency! — with a new little human being to take care of. Until now, you’ve only been responsible for your own life. Now, you’re responsible for the life of someone else – someone you love more than life itself.
And while new parents’ minds are whirling with what-ifs and possibilities, there are many what-ifs that revolve around money. After all, a new child brings with him or her the possibility of all sorts of money questions, issues and problems.
But just sorting through your financial questions can help you form a plan and feel more settled as a new parent. So if you’re about to have or adopt a baby — or if you’ve just become a parent — ask yourself these money questions.
1. How Do We Save More Money?
The USDA estimates that it will cost somewhere around $250,000 to raise a baby from birth to 18 in today’s world. But it really doesn’t have to cost that much to raise a child.
Sure, you can choose to spend money on all the extras, but they aren’t necessary. So if you’re strapped for cash, look for ways to save. Some ideas include:
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Buy less baby stuff. Many of the products on the market today are simply unnecessary.
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Go for double duty items — especially for larger purchases. For instance, buy just a pack n’ play instead of both a pack n’ play and a crib.
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Buy used. Most baby items — especially clothes — can be bought lightly used for a fraction of the cost. As long as you check for safety hazards and product recalls, you can safely buy just about anything (besides a car seat!) on Craigslist or eBay.
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DIY it. From decorating the nursery to making baby food, doing things yourself instead of paying someone else to do them will save you a fortune.
2. What Updates Do We Need to Make for Our Taxes?
While a big tax return check seems like a good thing, that check at the end of the year just means that you’ve given Uncle Sam an interest-free loan all year.
So it’s important to come out as close to $0 as possible when it comes to your taxes. And when you have a child, you get extra dependent exemptions. Be sure you take them.
Also, if you’re planning to pay for child care, check out your tax-saving options. See if your employer offers a Flexible Spending Account, which lets you pay for child care with pre-tax income. If not, keep your receipts and file for the child-care tax deduction at the end of the year.
3. What About Life Insurance?
Life insurance is absolutely crucial for new parents. While you don’t want to think about possible tragedies, you do want to provide for your child in case something should happen to you.