5 Money Moves to Make when Having a Baby

Having a baby? Or perhaps you recently gave birth to a new child? If either of those ring true, there are 5 important steps to take once the baby is born.

These steps are something that every new parent should visit – and not procrastinate on. One of the most exciting life experiences is the birth of a new child – whether it be the first, or fifth (or, seventh…) ;)    Likewise, it’s also a game-changer in terms of your financial plan.

You will want to make sure you are starting off on the right foot to ensure your family is well taken care of. Here are 5 essential money moves you will want to take. 

#1 – Review your life insurance, add your child as a rider

Planning for this baby can start well before they are born – you’ll want to make sure you have a life insurance policy on yourself, as well as your spouse (yes – even if they don’t work outside the home!)

If ANYONE relies on you financially, you need life insurance.

It’s your responsibility to take care of your family – I would even go on to say, if someone relies ON you, you need life insurance. And we say this because many Stay at Home Moms assume that because they may not contribute financially, that they don’t need it. They need it JUST as much as their spouse who may be bringing in a full time income.

Once baby arrives, take the initiative to call up your life insurance and add your new child to your policy in the form of a rider as quickly as you can, ensure they are taken care of from a financial standpoint just in case anything happens.

Our Child Rider was available on our Term Policy and runs us an additional $50 – $60 a year.  A Child Rider covers ALL of our children, with an amount between $10,000 – $20,000 (for each) which takes care of not only burial expenses, but expenses incurred since you will likely need time to grieve (away from work)… and the possible expense from counseling.

#2 – Get a Birth Certificate & Social Security Number – quickly

The longer you delay in picking a name and applying for a social security number, the more time you lose in terms of saving long term for their future – college, that is.  Even if you don’t have plans for them to go to college, it’s easier for you to sacrifice now, than to plan in 18 years should they change their mind.

Likewise, ensure that before you leave the hospital, you turn in the birth certificate paperwork to get that taken care of as well. In most cases, applying for the birth certificate will also allow you to apply for the social security number (through the same paperwork).

Remember that 529 plans are a great vehicle – and if they opt out of college, you can always use that money for another family member to go to college or, even for yourself should you decide to go back to school. 

#3 – Start Saving for College as Early as you Can

College is an incredibly expensive venture – it won’t hurt to plan ahead… College is NOT cheap – the average cost for ONE year of college right now is just under $9,000.

If your children have plans to attend at a school out of state, or a larger university that number may essentially be more.  By saving early on, you have the advantage of time and compound interest working in your favor.

Take the time to set up an account for your new child, and a draft from your checking that will automatically pull out a set amount each month. It will FORCE you to budget for that gap and it might just be easier than you think. One of the hardest steps to putting away for their college is actually taking the first step to open up an account.

In MOST cases, once you budget for that amount, you will forget about the draft… and a few years later, you will thank yourself for making that initial step.  Read more tips to help you put away, and find out the common misconceptions about 529 plans.

#4 – Adjust your Will to Account for your NEW Child

There are many important changes in family status that should prompt you to revisit your will and make important changes.

The birth of a new baby is one of those family status changes.

If you give birth OR adopt a new baby, you need to update your will because your baby will need a legal guardian should anything happen to you or your spouse. 

If you are adding a first child and a new guardian, a new will should be written; otherwise, you can prepare and sign a codicil to the existing will. A codicil is a separate document that adds to, or replaces, one or more provisions in an existing will. You can visit a wills and trusts lawyer for changes to an existing will, or an estate planning lawyer for legal advice. OR simply prepare and sign a new will that revokes an earlier one.  Sometimes Groupon has offers on wills for couples and individuals.

#5 – Add your NEW Baby to your Health Insurance within 30 days of Birth

You would think they may know – after all, you are certain they are familiar with the expenses you have incurred during your prenatal appointments. But you can’t assume that adding the new baby will happen automatically… because it certainly doesn’t.

You need to let your insurance company know you are adding a new child within 30 days of their date of birth – you can do that through your workplace, or, calling your insurer directly.  Since a new baby is considered a qualifying life event, you won’t necessarily have to wait until an open enrollment period comes around.

Once added, the insurer should provide coverage retroactive to the date of birth.