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Smart Money Moves New Parents Must Make Now
Motherhood Hacks

Smart Money Moves New Parents Must Make Now

Having a baby can be one of the most exhilarating times of your life, but it may also put a huge strain on your budget. While you may be eager to start spoiling your bundle of joy, taking the time to plan out and make smart money moves now will give you peace of mind knowing that you are ready for both immediate and future expenses. In this blog post, we'll share some of the best tips to help secure a robust financial future for your family. 

Savvy monetary strategies for new parents

1. Have an emergency fund.

Setting up and maintaining an emergency fund is critical to any new parent's financial plan. It's a great way to save for unexpected medical bills, car repairs, or even the occasional babysitting expense. Start by setting aside a small amount each month in a separate savings account—even if it's just $20 or $50! You might be surprised how quickly those little amounts add up over time. A good rule of thumb is to target at least three months of expenses saved up as your emergency fund. This will keep you covered no matter what curveballs life throws at you. 

It can be a struggle to stick to a saving plan, but try setting up an automatic transfer from your checking account each month. This way, you won't be tempted to use it on something else, and you don't even have to think about it! You can also set up reminders in your budgeting app, so you always know how much money is going into savings—and use those notifications as motivation to keep the good habits going. Finally, once you have your emergency fund built up, make sure not to dip into it unless absolutely necessary.

2. Get life insurance. 

Protect your growing family with life insurance. This will help provide financial security if something happens to either parent. While it may seem formidable, getting one doesn't have to be complicated or expensive. Start by researching different companies and policies to find one that meets your needs. Make sure you consider the amount of coverage, premiums, and any additional riders or benefits associated with each plan. Remember to ask about discounts for couples and families. Once you've chosen a policy, enjoy the confidence of knowing that your family is secure. 

3. Start saving for college.

You don't need lots of money to get started—just a little bit each month can make a big difference over the long run. Many parents begin by opening a college savings account and making regular deposits. You may also be able to make the most of tax incentives offered by your state, or you can go for a 529 plan. This is an investment account specifically designed for higher education savings. Also, don't forget that scholarships are available to help reduce the amount you need to pay out-of-pocket. With some research and planning, you can begin to get your college fund on track!  

4. Set up an estate plan.

Setting up an estate plan is vital to protecting your family's well-being and financial security. Having one will help ensure that your wishes regarding your finances, property, and care for your children are respected after you're gone. To get started, you'll need to consult an experienced attorney. They can help you create a will and set up trusts, so your assets are distributed accordingly. You should also take the time to select guardians for your children that you trust to make decisions on their behalf in case of an emergency. With the help of a knowledgeable attorney, you can create an estate plan that will help safeguard the welfare of your loved ones. 

5. Take full advantage of tax breaks. 

There are several ways that parents can maximize the benefits of tax breaks and save money on their taxes. For example, the Child Tax Credit allows parents to claim a credit of up to $2,000 per child under age 17 with earned income in the household. Additionally, parents who have a child in college can get some monetary support from the American Opportunity Tax Credit (AOTC), which offers up to $2,500 per eligible student. Also, if you pay for childcare, you may qualify for the Child and Dependent Care Credit, which can provide up to 35% of your costs for certain expenses. Additionally, you can deduct a portion of work-related expenditures concerning the care of your child. These may include transportation costs and fees paid to a daycare provider. 

6. Build a network of support.

Having a strong network of support around you when it comes to money matters is invaluable. Not only can it be beneficial for obvious reasons like budgeting advice, but it also enables you to get the emotional support you need if things get stressful. 

Start by talking to friends, family, and colleagues about their experiences of managing finances. You can also join local parent groups or online forums where you can ask questions and share ideas with other parents who have been through the same challenges. Finally, don't forget to reach out to professionals like financial advisors. They can help create a plan that takes into account your particular situation, goals, and objectives. 

7. Review and finetune your budgetary plan.

Are you spending too much on groceries or daycare? Is there a way of avoiding overdraft fees, getting rid of unused subscriptions, and other unnecessary expenses? Once you have a better idea of where your money is going, you’ll be able to make more informed decisions about how to reallocate your funds.

While it may seem challenging to adjust your budget, a few tips can help you make the transition more manageable. First, determine what items are most important for your family and prioritize those in your spending plan. It might help to create a "need versus want" list to understand where you can cut back on unnecessary costs. Then, focus on building an emergency fund that will cushion the burden of any unexpected expenses. Setting aside a portion of your income each month for longer-term goals, such as a retirement account, is also essential. 

Wrap Up

Making these smart money moves now will save you time and stress later on. It's never too early to invest in your family's financial security, so don't wait any longer – get started today! For more tips and tricks to successfully navigate your journey as parents, check out the blog of Moms Beyond.

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