In four more months I’m becoming a father for the first time. My wife and I are excited to bring a new person into the world, but with it come so many challenges. How much do we spend on childcare? Are we going to need to buy the latest and greatest stroller? What about college, which can push up to $50,000/year in tuition?
I have been told throughout life that kids are extremely expensive and difficult to afford, so I want to make sure we’re best prepared for this new fiscal responsibility.
Here is a rundown of what we’re doing to prepare for the little one.
With huge medical procedures and doctor’s bills on the way, we had to reassess what the best course of action for health insurance would be. Since we have a high deductible health insurance plan, we are able to contribute extra to an HSA to save taxes on costs. We plan to hit our deductible this year and will be taking advantage of this by visiting specialists throughout the year.
With the addition of our first dependent, it was a great opportunity to revisit our life insurance policies, and make sure the other would be covered if the worst happened to one of us. We got quotes from multiple companies and shied away from any insurance brokers who tried to add extra disability riders and whole life insurance options. By shopping around we were able to find a company with an “A” rating for less than half of the price of some other places we were quoted.
One of the most powerful ways I’ve found for preparing for new life events is putting away money to a new savings account as if the new expense was already occurring. Using online calculators, we estimated what the baby is going to cost us on a monthly basis and have started putting aside savings each month to a separate account in preparation. Once the baby is born, we won’t have the shock of the new expenses to worry about and will even have a little savings ready in case costs exceed our expectations.
This is a huge life step with a lot of unknowns, but thankfully I have tools to reduce the anxiety of the unknown as I prepare to celebrate my first Father’s Day next year.
Three Things I’m Doing to Financially Prepare for Being a New Dad is written by The Financial Gym Team for financialgym.com