5 Financial Tips for New Parents
Many of our team members at Halpern Financial have young families, so we have personal experience of all the joy and excitement that new little ones bring…as well as the late nights and higher expenses. We can’t help much with the late nights, but we can share tried-and-true advice on how to budget for a new baby.
It can be tough to figure out what is truly needed, especially if it is your first child. Salespeople know this, and will pull at your heartstrings to make a sale. Of course you want your baby to have everything he or she needs to be happy and healthy. It’s one of the most special times of your life, after all—so how could you deprive your little one of the Wipe Warmer 3000?
We have a few tips for new parents to help limit costs and focus on what’s truly important:
1. Baby stores usually provide a "must haves" list for new parents.
The list usually includes far more than you really need, so don't feel like you need to buy everything. Talk to your friends to find out which items are truly a “must-have” versus a “nice-to-have.” If you ask a store clerk, don’t be surprised if they try to convince you that everything is a “must-have”! It's important to keep things in perspective. “Allow yourself a budget to have fun with welcoming the new member of your family, but remember what's most important is the baby about to enter your life, not the stuff,” says Planning Consultant Milena Nilsen.
2. Don't customize everything.
If you want to, monogram just a couple things. As Ted Halpern found out with his twins fourteen years ago, these items are very cute, but hard to pass along as hand-me-downs. And if you plan on expanding your family in the future, remember, the younger sibling who gets these items secondhand may not appreciate wearing your firstborn's name on everything!
3. Don't be shy to accept pre-owned things from your friends and family.
Children use equipment and clothes for only a couple months and they are careless about keeping it clean or neat. So do not feel self-conscious about accepting these hand-me-down gifts—in all likelihood you will be handing them down to another friend soon! As our Operations Administrator Lindsie James has realized with her 16-month-old son, hand-me-down toys tend to be his favorites.
4. Nothing lasts forever.
Although there may be a few things you want to save as a keepsake, you will say goodbye to kids’ stuff sooner than you think. Besides, the evolution of baby gadgets within even just the past five years is tremendous! Also keep safety issues in mind, since new recalls and design improvements come out every year.
5. Look toward your future financial security.
A lot goes under this topic, but here are a few of the big areas to cover:
- Understand your health insurance and health saving options. Prior to the birth of your child, it is worth your time to understand your health insurance and prepare for anticipated medical costs. You can even save for up to $5000 of these costs in a tax-free way if your employer offers a Health Flexible Spending Account (each parent can save up to $2,500 per employer-provided FSA account). Later, you can use a Dependent Care FSA for childcare, preschool and other qualified costs (maximum savings per year may vary depending on your employer’s plan). Saving in these pre-tax accounts is like getting a discount equivalent to your tax bracket!
- Protect against risk. Getting your life insurance in order and selecting a guardian for your child in case something happens to you and your spouse should be top priorities. Meet with an estate attorney to create a will as well as any other needed estate planning.
- Prepare for the future. The earlier you start saving for college, the more time your money has to compound and grow tax free. Saving for college in 18 years may seem overwhelming when there are so many costs to new parents, but it is well worth it. To give an example, if you started saving $200 monthly at your child’s birth, you could have over $30,000 more than you would by waiting five years to start saving the same amount. That is the power of compounding! Keep this idea in mind for any other financial goals for your child like a bar or bat mitzvah.
- Put on your own oxygen mask first. The power of compounding holds true for your own retirement saving too—so do not sacrifice your retirement savings to save for children’s college, or any other expenses along the way. Think of it as putting on your own oxygen mask first before trying to help others.
There is nothing more empowering than having financial security for yourself and your family. At Halpern Financial we are happy to help you along the way.
Photo used under public domain
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Halpern Financial, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Halpern Financial, Inc.. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Halpern Financial, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Halpern Financial, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request. Please Note: Halpern Financial, Inc. does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Halpern Financial, Inc.’s web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.