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5 Financial Steps Every New Parent Should Take

Chris Gottschalk

Chris Gottschalk About The Author

Nov 12, 2020 6:15:00 AM

Becoming a new parent is wonderful, but it’s also stressful. After all, you’re responsible for the entire well-being of this little person wrapped in a blanket looking up at you.

Before you get overwhelmed by the enormity of this task, take a deep breath and calm down. Millions of people around the world do a great job raising their kids, and you’re going to do a good job too. However, there are some steps you can take shortly after your child is born that will help maximize your new family’s financial security, minimize stress in the future and let you focus on being the best parent you can be.Open a Youth Account

Fill Out Your Baby’s Paperwork

When your new baby is born, you’ll get a birth certificate. Make sure to fill it out and return it to the nurses before you and your baby are discharged. Doing this as soon as possible will help you avoid any bureaucratic entanglements, as well as late fees.

While you’re at the hospital, you should also apply for your child’s Social Security Number. If you don’t, you’ll have to wait until you get the birth certificate to apply for one so you can prove to the government that your child actually exists.

You’ll want to get your baby’s Social Security Number as soon as possible. It opens up the financial world to your child, and it’s a prerequisite for many of the following actions you’ll want to take.

Update Your Tax Forms To Claim Child Tax Breaks

New parents | First Alliance Credit UnionThanks to the Tax Cuts and Jobs Act of 2017, the Child Tax Credit was doubled from $1000 per child to $2000. This is a fantastic opportunity for new parents, so you’ll want to make sure to update your tax forms with this information.

You’ll also want to look at the Earned Income Tax Credit, which helps people with low to moderate income, and the Child and Development Care Credit if you’re paying someone to take care of your children while you work.

Make sure to talk to a qualified tax professional as well to make sure you get your full tax benefits from becoming a parent.

Add Your Child To Your Health Insurance Plan

Since healthcare costs in America are stratospheric, you’ll want to get your baby on your health insurance plan as soon as possible. While almost all health insurance companies only have one enrollment period per year, having a baby is considered to be a qualifying life event. This lets you add your new baby to your insurance plan within 30 to 60 days of it being born, depending on your health insurance plan.

If you enroll your child during that time frame, they are retroactively covered, and any medical expenses your child incurred during that time will be covered as well. This can potentially save you thousands of dollars in medical bills.

Buy Life Insurance

Now that you have a family, you’ll want to make sure they’re provided for even if something happens to you. That’s where life insurance comes in.

Life insurance pays your next of kin if you die, and it’s surprisingly affordable. In fact, the premiums for younger adults who are in good health can be less than what you pay for a streaming service.

You’ll want to talk with a financial advisor or use a life insurance calculator to figure out how much life insurance is right for you, but a good rule of thumb is to get enough life insurance so your spouse and children receive eight to ten times your annual salary.

Make A Will

While life insurance will make sure your loved ones are taken care of financially after you die, you’ll need to think about what happens to your other assets, not to mention who will be your child’s legal guardian. You need to get a will in place to take care of all these arrangements.

Will and Testament | First Alliance Credit UnionWhile you can write your will on your own, you should have an attorney review it to make sure it will stand up in court. You’ll also want to think about who gets what assets. If this seems a little overwhelming, don’t worry. If you don’t get it right the first time, you can always go back and change it later.

Once you’ve created a will, you’ll want to review it once a year and make sure you still agree with the decisions you’ve made. Also, be sure to let your loved ones know about your will and what’s in it to make sure your instructions are followed after you’re gone.

Prepare for Parenthood With First Alliance Credit Union

Being a new parent is wonderful, but it’s also stressful. However, if you take the financial steps described above, you can provide your child with some financial stability and you with some peace of mind.

You can also prepare yourself for parenthood when you become a member of First Alliance Credit Union today. In addition to our traditional savings accounts, you can also put money in a money market account with a higher interest rate or invest the money in a certificate of deposit (CD) until you need it. You can also apply for a personal line of credit that you can use for anything from surprise medical bills to home repairs.Schedule a Call