The First Financial Steps for
While a new baby is a joyous addition, children also bring added financial responsibilities for new parents. The Pennsylvania Institute of Certified Public Accountants (PICPA) offers this advice on making the right financial choices:
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- Create a budget: Take the time to consider how the new addition will affect your family’s monthly finances. As soon as you learn you’re expecting a baby, begin putting together a regular monthly budget so you’re prepared for changes in your financial situation.
- Make a will: If you don’t already have one, now is the time to write a will that spells out who will receive your money and other assets if you die. In the document, name the guardian who will care for your child if you die before he or she is 18. This is also a good time to analyze your disability and life insurance needs.
- Plan for the future: Preparing for the long term means saving both for retirement and your child’s college education. When you create your budget, be sure to include regular deposits into retirement accounts and college funds. If you have to make a choice between the two, CPAs advise that you put your retirement savings first. If you don’t have the money to cover tuition when your child reaches college age, there are options such as scholarships and relatively inexpensive loan programs to help.
- Get out of debt: If you are already carrying heavy credit card balances or other debt, analyze your budget to see if you can raise your monthly payments. Remember, you’re not just paying for past purchases, you’re also paying interest on your outstanding debt each month.
- Don’t go broke: There are many necessary expenses associated with a new baby, but don’t fall into the trap of spending more than you can afford. Many people mistakenly believe that a happy childhood requires elaborate toys, birthday gifts, and room decorations. In fact, the best choice you can make for your child is to spend wisely and keep your family on a sound financial footing.
Source: The Pennsylvania Institute of Certified Public Accountants (PICPA).
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