Four Financial Tools All New Parents Need
The baby's on the way! You've got a crib, toys, and a rapidly approaching delivery date. So what else you do need? Kiplinger shares the four must-have financial tools that no new parent should go without...
1. A Budget: Yeah yeah, you've already read one of our numerous guides and written a budget, but a baby requires a wholesale re-write. Figure out how you're going to pay for day-to-day necessities like diapers, while starting to save for long-term budget-busters like college.
2. Life and Disability Insurance: If something happens, you're not going to be the only one to suffer. Take out life insurance worth four to eight times your annual salary, and consider disability insurance that can covers your whole salary in case of an accident.
3. Health Insurance: Make sure you have health insurance and don't forget to add your new child to your policy! Check your spouse's policy and see whose will best accommodate your new baby. Without insurance, delivering a baby can cost more than a semester at college.
4. A Will: Even if you have life, disability, and health insurance, you're still going to die. Hopefully it won't happen anytime soon, but if it does, you don't want a court deciding who's going to raise your kid. Hire a lawyer and name a guardian to raise your kids and manage your estate.
Crib? Check. Toys? Check. Don't Forget a Budget, A Will and Insurance. [Kiplinger]
(Photo: darabidduckie)
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Comments:
Everyone should have #4 whether or not they're parents.
When I have a baby, it'll be a boy. And when I have a boy, I'll call him my man-cub. And when I have my man-cub, I'll only have to buy shredded bark for diapers and squirrel pelts for my man-cub's loincloths.
And no, his first day of kindergarten won't be strange. Not at all.
re: #3
Natural childbirth (often done outside of a hospital) is a much cheaper choice too!
Add to #3: And if your insurance company lies and says you didn't submit the forms in the necessary 30-day window* that enrolling new baby requires, make sure that your employer who did submit the form within the necessary 30-day window* happens to be a law firm. A litigious law firm. A litigious law firm that sues primarily errant insurance companies who routinely hose their customers by pretending not to receive said paperwork within their 30-day window.
I wait with baited breath to see Eyebrows McGee go medieval on them. Seriously medieval. Blow torch and pliers. Wrapped around copious bundled lawsuits. I want to hear insurance men-folk weep before it's all said and done.
* Seriously: why would this even exist except as a gotcha to hose customers?
5. Cash..the greatest of all financial tools.
Baby McGee takes time out of his busy being-eaten-by-frogs schedule to approve of this post.
@Trai_Dep: I'm guessing you have parents who decide not to put the little charmer on the insurance and NOT pay the increased premiums ... until junior develops a horrific disease and suddenly they want in. You'd have people trying to only insure sick kids while keeping the well ones off insurance, which raises premiums for everyone (as we've discussed with insurance companies doing just the reverse).
It'd be more reasonable to give a 90-day window with the caveat that parents have to pay the premiums back to the date of birth (or to 30 days after the date of birth or however the insurance runs that part of its coverage). 30 days is just VERY short with a new baby (they don't even get social security numbers for six weeks!) and doesn't give you much time to sort out any problems. Like the one we're having.
And personally I'm hoping the insurer gives in quietly and fixes everything, as much as I do enjoy going medieval. :)
As a parent of a 2 year old and a 1 year old here's my best tip for financial advice:
Buy crap on craigslist.org
Now I don't mean everything like cribs and car seats...but swings, pack and plays, outside toys and other stuff can be gotten for a lot cheaper. Both our "angel care" and brest pump were craigslist.org/ebay.com items for 1/2 the price.
@CourtStreetCourt: Excellent point. The average hospital birth is $10K while the average midiwfe assisted birth is $3K. I loved my midwives!
Also add to #3: No, your child is not automatically added to your group health plan simply by virtue of it's birth. And, as shocking as this may seem, the benefit administrator at your employer is not psychic enough to simply KNOW, without you giving that information, that your wife has had a baby! So don't be the dork that comes in to the benefit office when those bills for checkups come rolling in, all pissed off because the kid isn't on the insurance!
And 30 days is PLENTY of time to notify the plan administrator that you have a new dependent child. You had 9 months advance notice that the kid was coming!
@mythago:
Our company's new owners have a thing where they will do our wills FOR FREE. I might take them up on it. It would be a good time to make my funeral arrangements too. I don't want my family to think they have to spend a ton of money on a stupid casket. I want either the Body Farm or cremation (unless there was foul play).
@Eyebrows McGee (now with more baby!):
I love the frog towel!! I want to get one for my boss's new baby (will be C-sectioned out on Monday morning)!
He is so cute!
@Trai_Dep: One employer had a 14 day window with their insurance. HR never mentioned this issue to employees, even when they were taking maternity leave or their family leave days. They also didn't give out printed policy manuals any longer and this nugget of information was buried deep in the company intranet version of benefits information. Most first time parents were burned by this short window and simply not knowing. The fact that the employer knew many employees were getting stuck with $10k or more in bills due to this gotcha yet did nothing to inform people was pretty crappy.
@Dennis Judd: Add to that that you do not need every baby product on the market. There is a pretty good effort to convince new parents they need one of everything. Baby wipe and portable bottle warmers are not required equipment. You also do not need a stroller the size of a Volkswagen to transport a baby.
Make sure you begin saving for medical bills just in case too. We had a boy on 29 DEC 08, but there were complications. Our plan only covered 80%, leaving us with over $5k in medical bills. Lucilly we were able to cover it, but we are now having a summer "staycation."
@Eyebrows McGee (now with more baby!): Awww, he's so cute! I have one of those towels for my guy that's a shark, complete with a little fin on the top of his head and little teeth around the hood.
@Dennis Judd: Yes! Also, make friends with both people with kids older than yours and younger than yours. I get so many clothes from a lady I know whose son is a year older than mine. Once I'm done with the bouncer, swing, clothes, etc., I send it all on to my boss, who has a son five months younger than mine. It's free and beautiful!
@CourtStreetCourt: I had a midwife for my prenatal care that delivered in a hospital. My prenatal care was cheaper, and since I delivered in a hospital, my health insurance covered all but $300 of the birth. It was the best of both worlds for me.
@Trai_Dep: My employer tried rejecting my form to add my son on to my insurance. They said I needed to provide a social security number for him to add him online. No, I couldn't add him manually with HR. No, I couldn't call in. I finally just put a random number (the form wouldn't take something like 555-55-5555, so I made something up), and changed it once I got his social. Like Eyebrows said, you don't get a social for your kid until they're six or eight weeks old. Ridiculous!
@BreadBoy: that is a good idea. it's terrible to think about the debt that you could be under if you hadn't planned for a bad situation. i'm betting that's caught a lot of people off guard.
@Eyebrows McGee (now with more baby!): I can't fault the frog. That's one heckova tasty kid. Tip-top job, Eyebrows*, he's adorable!
* And Mr Eyebrows, of course.
@coolteamblt: Hand me downs are a beautiful thing.
I'd like to add - Yard/Garage/Rummage sales. I went this past weekend and got 10 wal-mart bags full of clothes for my baby (who's still 9 weeks away) for about $15 to $20. I kinda lost count after the first couple of sales I went to. I'm not bigger than my kid wearing clothes that have been previously worn, as long as they're not terribly stained.
@Dennis Judd: There is SO MUCH baby stuff here at yard sales. I seriously doubt you would need to buy anything new unless safety was an imminent concern (you don't want to skimp on a carseat). But for clothes and other things that won't cause harm BUY USED! I can't stress how much of this stuff is out there in my area. None of it sells either. There seems to be the attitude going around that everything that children touch needs to come straight from a box. I am sure you could get very cheap prices, or if the stuff doesn't sell I would take note on the houses and drive by on garbage day.
@coolteamblt: You should give her the shark towel, considering her and her husband's professions...:P
@RandaPanda: Sometimes, I'll buy the stained onesies, then hit the craft store and purchase a couple of iron-on transfers for a buck or two. It covers up the stains, and personalizes the shirts. It's kind of fun to do, too. I bought up a bunch of transfers on clearance, and I'm still using the same pack six months later.
@coolteamblt: That's WAaaaaaaaayyyyy craftier than I would ever think of being! That's awesome. I'll have to remember that in a 9 weeks when baby comes along.
I'm glad that you had a really positive experience. Was the midwife an employee of the hospital? I have heard stories of midwives employed by hospitals as being/feeling very constrained to make decisions that are in the best interest of the mother (as opposed to being in the interest of the hospital).
@CourtStreetCourt: She was a midwife that partnered with my OB-GYN's office. She had delivery rights at the hospital, but wasn't employed by the hospital itself. I liked that I had the more natural approach available to me, but since she was partnered with an OB, I had the option of getting more medical-styled care. She brought all sorts of labor tools, like a birthing ball, but when I decided enough was enough, I could get an epidural. I also chose a hospital that had a birthing jacuzzi, more home-styled delivery rooms, and they also encouraged rooming-in.
@RandaPanda: Yeah, it's fun. They make baby-themed iron ons, which can be cute, but you can get creative with the more generic ones too. My guy has a couple of shirts made with old English style letters that say things like "Wild Child", his name, and "baby boy". So much fun! I found the best ones at Joann's.
5: Cashforkids.com. In case they act up, or you just need the money.