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Starting a family?

What you need to do right now

For most young couples, the decision to marry or start a family is not a matter of “if” but “when.” Of course, it should be a joyous time for young parents. However, with the tab for raising a child to adulthood topping $300,000 on average, it does take some preparation and planning so as not to get caught in a cash crunch that can impede a family’s ability to meet other critical goals. 

Although many couples wait until they have all their financial ducks in a row before welcoming their first child into the world, it really comes down to anticipating the immediate costs of starting a family and having a plan to cover them as the needs come up. 

Here is a list of the essential needs new parents must consider in the order they might arise:

  • Build a cash reserve fund: The moment the wheels start turning on starting a family, you should begin saving earnestly for a cash reserve fund. Every family should have at least six months’ worth of living expenses saved for the unexpected. With a new addition to the household, you might want to add another six months’ worth of savings to offset the possibility of reduced work hours.
  • Build a baby budget: Many new parents anticipate the cost of another mouth to feed as well as the continuous stream of diapers and other supplies; however, budget items such as the increased costs of utilities (bigger and more frequent wash loads for clothes and dishes) tend to catch many households by surprise. 
  • Family-sized health coverage: Depending on the type of health insurance you have, adding a newborn child is relatively simple; however, it will increase your healthcare costs, and you need to consider the added costs of any copays and deductibles. Take the time well before your child is born to look into your coverage and be sure to apply the total expenses of baby care to your budget.
  • Parental leave: Most employers allow for parental leave. You need to know how your employer treats it, and if it doesn’t provide for paid time off, you should consider building a cash reserve fund to offset the loss of income.
  • Child care needs: If one of the parents plans on staying home with the child, there may be no immediate need to cover childcare costs. However, it would be important to plan for the time when the parent may return to work. Childcare costs can approach $800 a month, so having a plan is vital to keep your costs down. 
  • Get legally fit: Some legal upgrades, such as adding beneficiaries to life insurance policies, or making guardianship arrangements in your will, can wait until just after the baby is born. However, if you don’t have a will or the right amount of life insurance coverage, get it now, before the baby is born.
  • Get tax advice: Having a baby creates a whole new tax situation that should be thoroughly understood. Some exemptions, deductions, and credits come with a new baby, many of which can help increase your budget capacity. 
  • House babyproofing: This need tends to catch many new parents off guard. A lack of preparation ahead of time often leads to parents scrambling later as situations dictate which can increase the costs of baby-proofing. Taking the time to plan thoroughly can help keep your costs down.

Although not wholly exhaustive, this list addresses many vital issues that should be addressed well before the due date, not only for your first child but for each joyous bundle that comes along. It helps to establish some professional relationships with a financial advisor, a tax professional and an attorney in the run-up to starting your new family. 

About This Author


Alpine Bank Staff

Alpine Bank is an independent, employee-owned organization with headquarters in Glenwood Springs and banking offices across Colorado’s Western Slope, mountains and Front Range.

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