Don’t Stop With the Nursery

DON’T STOP With the Nursery... WITH THOMAS MCCARTNEY

eing a young, expecting parent is such an exciting time! There are so many things to prepare for and they seem to all be additional demands on top of an already busy life. Thinking back at that stage of life I laugh at the incredible focus we put on the preparation of the room our newborn would be coming home to. Partially driven by hormones, partially by the excitement of it all, that room became a bit of an obsession. As is often the case, focusing on a tangible task can be much easier than an intangible one even if the intangible is much more important. As important as the nursery is, of greater importance is getting your financial house in order as you prepare for the responsibilities of bringing a new, precious life into the world. Here are a few things to keep in mind.

INSURING A STABLE FUTURE FOR YOUR FAMILY

HEALTH INSURANCE

Start thinking about health insurance long before the baby arrives. Find out about copays, deductibles, and premiums before you start going to doctor’s appointments and having diagnostic tests done. You’ll also need to determine how much of the delivery costs are covered as well as the baby’s coverage after it’s born. Babies are usually covered under their mother’s insurance for a period of time following the birth, but make sure you add the baby within 30 days, or else you may have to wait until the next open enrollment period. LIFE INSURANCE

Now that you have a child depending on you, you’ll need insurance to provide for your family if your income is lost. You should also take out a life insurance policy for your spouse even if he or she stays at home to care for the child—take into account the value of a stay-at-home parent’s services and how much it would cost to pay someone else to do it.

Consult your financial advisor to help determine both the amount of insurance your family will need as well as the type you should purchase. There are pros and cons to both term and permanent insurance and for many a combination of the two is the best fit.

DISABILITY INSURANCE

During your prime income earning years, you’re much more likely to suffer a debilitating accident or disease than you are to die. This makes disability insurance equally important to ensure your family’s financial well-being. Your employee benefits may provide some disability protection but often not at the level you would actually need necessitating supplemental coverage.

If you are like I was, the realization that another life depends on you financially can be overwhelming. Your goals and investing strategy will probably need to change when you become a parent, but not necessarily in the ways you’re expecting. BE REALISTIC

It may not be possible to continue to invest as much while budgeting for the new expenses that come with being a new parent so it is important to be realistic. Try not to focus all of your money and attention on baby spending, and don’t ignore your long-term savings goals completely. Your first priority will have to be day-to-day spending and budgeting, followed by your retirement savings. When these two goals are being met, you can add your child’s college education as a third priority. EDUCATIONAL SAVINGS

It’s tempting to put your child’s education fund first. There’s nothing wrong with putting your children first, but abandoning your investing goals in favor of a child’s education is actually not putting the child first — if you retire with nothing, your child will be left supporting aging parents, which can be much more difficult than funding a four-year degree. That said, investing in your child’s education early in life is a good idea if you can afford it. Compound interest can be just as magical for your child’s college savings as for your retirement account. Consult your financial advisor to review options and to develop a strategy.

BECAUSE THE UNEXPECTED HAPPENS…

Despite careful preparation we found ourselves scrambling when our kids were born. Due to complications neither was carried to term with Mary arriving at 4lbs. 10 oz.and Jack at only 1lb. 8oz. Thankfully we were able to focus on their care without distraction as we had our financial house in order and both have grown up to be fine adults. Hoping that the ideas shared here are helpful as you travel down the exciting road of parenthood and we welcome your call if we can be of service.

This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.

n Tom McCartney is the Founding Principal of My Advisor & Planner and a registered representative and investment advisory representative with M Securities. Investments in securities involve risks, including the possible loss of principal. My Advisor & Planner is independently owned and operated. McCartney and his team can be reached at info@mapyourfuture.net or 630-457-4068.

Photo by Indre Cantero

Securities and Investment AdvisoryServices offered through MHoldings Securities, Inc. (Member FINRA/SIPC). My Advisor &Planner is independently owned and operated.