Welcoming a new baby into your family is exciting, but can also be overwhelming. Now that you’re responsible for a new life, it’s important to have your finances and insurance in order — so you’re ready for whatever happens in the future. Here are a few key financial decisions to consider as a new parent.
Update Your Health Insurance
Because having or adopting a baby is what’s known as a qualifying life event, you don’t need to wait for the open enrollment period to add your new baby to your health insurance plan. However, you will need to contact your insurance company to tell them that you’ve had a baby — usually within 30-60 days, depending on your plan. Even if your health insurance covered your pregnancy and delivery, they won’t typically add your baby automatically, so you need to be proactive.
Add Beneficiaries to Your Accounts
If anything happens to you, you want to be sure that your family has access to your financial accounts. You can name your spouse or another family member as your beneficiary, which gives them immediate access to the funds after your death. If you haven’t named a beneficiary, the funds in your accounts go into probate, and it could be months or even years before your loved ones have access to that money. It’s also important to note that while you’re alive, your beneficiaries don’t have any rights or access to your accounts.
Consider Life Insurance
Life insurance coverage can help your family pay off financial commitments like a mortgage, auto loan or college expenses in the event of your death. If your family relies on your income, then having life insurance protects them from financial difficulty if you’re no longer around. Our agents can help you choose a life insurance policy if you’re not sure how much coverage you need.
Review Your Tax Situation
As a new parent, you may be eligible for new-child tax credits and deductions. Consult your tax advisor or visit the IRS website for information about what you might qualify for. You may also need to update the number of dependents on your W-4 form to adjust the amount of tax withheld from your paycheck.
If your company offers a Dependent Care Flexible Spending Account (DCFSA), you can use pre-tax dollars to pay for qualified childcare expenses and reduce your overall taxable income. But keep in mind that FSA funds don’t roll over into the following year, so any money you put into your DCFSA must be used for qualified care expenses within that year.
Start Planning for College
It may seem like it’s too soon to start saving for college when you have a newborn, but starting early means that your savings and investments have more time to grow. There are a variety of different types of education savings accounts, including Coverdell Education Savings Accounts (ESAs) and 529 plans, so you may want to get advice from a financial advisor about which college savings plan is right for your family.
Take a Look at the Big Picture
We’ve shared several things you should consider as a new parent, but every family is different. One of the best ways you can support your family’s future is to evaluate your overall financial situation and make sure you have what you need to live the life you want.
If you want to take a look at the big picture, our Money Makeover experts can help. Whether you want to create a budget, find more ways to save or planning for your family’s future, you can visit any VyStar branch or call us at 904-777-6000 or 800-445-6289 to make an appointment to talk with a Money Makeover coach. We also offer free financial counseling services to VyStar members if you need more guidance.