When it comes to welcoming a baby into the family, there’s a growing (and exciting!) to-do list for expectant parents, from choosing a name to decorating the nursery, stocking up on baby clothes, and building a library of baby books. Amidst all of this preparation and excitement, it can be easy to postpone, or even overlook, thinking about the financial aspects of adding another family member to the household. Jody Lewis, Branch Manager in Moosic, (and, incidentally, the mother of triplets who knows a little something about planning) offers a few financial tips to help expectant parents get their financial house in order, before and after, baby’s arrival.
A checklist for Pre-delivery Planning:
- Review your health insurance policy. Every plan offers different coverage for expectant mothers, and knowing what is, and is not, covered before the birth is important. “You must understand your health insurance benefits so you can anticipate the costs that you may incur,” Jody said.
- Plan for maternity and/or paternity leave. Just as health insurance policies vary, so do company maternity and paternity leave policies. Employee handbooks are a good place to start to determine the length of maternity or paternity leave, and how much of that time will be paid time off. For some expectant parents, FMLA (Family and Medical Leave Act) may be a factor. FMLA “provides eligible employees up to 12 workweeks of unpaid leave a year, and requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave. Employees are also entitled to return to their same or an equivalent job at the end of their FMLA leave.* Human Resources Directors are a great resource to sort out the details. They’ll help expectant parents determine how much income they will have during their time of absence, and properly plan for maternity and/or paternity leave.
- Choose a pediatrician. Why is this on the financial to-do list? Because inadvertently choosing a pediatrician out of network could be costly. Since the baby’s first appointment is typically scheduled within a week of their birth, Jody recommends parents select a pediatrician within their insurance network during pregnancy so there’s plenty of time to vet health care professionals properly.
- Make a plan for childcare. For those who require childcare, finding the right option can be a lengthy process. Jody recommends researching options early on so parents have adequate time to seek recommendations, interview prospective nannies, visit daycare centers, check references, and find the option best suited for their family, and their budget.
- Update the household budget. “Planning a post-delivery budget for recurring costs is very important,” Jody said. The new budget needs to reflect the cost of diapers, baby clothes, formula, and childcare (if applicable), etc. Online baby calculators are a great tool to help expectant parents estimate what their expenses will be after the baby is born. Another strategy Jody suggests: create a savings account labeled “Baby” and contribute to that fund every pay period. Many banks, including Fidelity, offer a service that automatically transfers a certain amount from each paycheck into a savings account. Parents can set this up in a few minutes, and check this off the list!
- Register for baby gifts. Having a baby shower? Register early, and then be sure to incorporate the cost of any items not received into the new household budget.
- Don’t forget about the Rainy Day Fund. Of course, expectant parents shift their focus away from themselves and onto their new baby, but try not to let that Rainy Day Fund go by the wayside. If possible, Jody recommends setting aside 3 to 6 months of expenses for unexpected costs that may arise. If that’s too ambitious, save whatever is feasible. Every little bit in reserve helps during emergencies.
- While in the hospital, order the baby’s birth certificate and social security card.
The baby has arrived! What to do in the first month:
Within the first 30 days of baby’s arrival, parents should:
- Add the child to their health insurance policy;
- Consider purchasing a life insurance policy for the child;
- Make their final decision about childcare (if they haven’t decided this already); and
- Revisit the budget, factoring in all of the above costs.
Beyond the first month:
After the first month of welcome baby home, parents should consider:
- Adjusting the beneficiaries on their life insurance and 401K plans (if applicable);
- Assessing the amount of disability insurance they have, or adding short-term disability insurance. They may want to adjust their existing policy, or purchase a supplemental policy in case they are unexpectedly out of work for a period of time.
- Writing or amending their wills;
- Contributing to their own retirement accounts; and
- Starting a college fund. It may seem premature, but it’s really never too early to start saving for college. Even modest contributions to savings add up over time.
Need help planning for your growing family? We’re here for you. Fidelity Bank has multiple local branch offices throughout Lackawanna and Luzerne counties, and our full-service Customer Care Center is at your service 7 days a week. Call or visit your local branch office today.
Daniel J. Santaniello, President and CEO, of Fidelity Bank, publishes Financially Fit with Fidelity, your guide to financial well-being, every Thursday. If you’re interested in a financial topic we haven’t yet covered or want to subscribe to our emails, please feel free to drop us a line at blog at fddbank dot com. We would love to hear from you.
*U.S. Department of Labor