8 Smart Financial Tips for New Parents

New parents rarely, if ever, have time to map out a family budget or hire a budget planner. Lucky for you, we're here to help you establish a family budget.

Now, let's look at eight finance tips for new families.

 

1. Set Up an Emergency Fund

There is no telling when an emergency will strike. Whether it's a tornado that causes massive amounts of property damage or a minor car problem, it is important to remember that disasters come in all shapes and sizes. Thus, you should set aside money each month to financially prepare for emergencies.

2. Establish a Dependent-Care FSA

Raising a family is expensive, regardless of whether you have one child or many. Fortunately, a dependent-care flexible spending account (FSA) enables you to use pre-tax dollars for many childcare costs. With a dependent-care FSA, you can allocate thousands in pre-tax dollars annually for daycare, preschool, and other child care expenses.

3. Capitalize on Tax Credits

New parents are eligible for various tax credits, including a child tax credit and earned-income tax credit. They also can receive tax exemptions for dependents. If new parents learn about tax credits today, they can incorporate these tax breaks into their budgets for years to come.

4. Buy Disability Insurance

Disability insurance guarantees you are financially protected in the event that you suffer a disabling illness or injury that prevents you from working. Many employers offer disability insurance, so you might already have this coverage at your disposal. However, you may want to supplement your existing coverage; that way, if you or your spouse suffers a disabling illness or injury, you can ensure your family can still cover your mortgage, childcare costs and household expenses.

 

5. Select a Pediatrician Who Falls Within Your Covered Network

Many health insurers offer new parents access to a wide range of friendly, knowledgeable pediatricians. Find a pediatrician who falls within your health insurer's covered network. By doing so, you can avoid the potentially exorbitant medical costs commonly associated with using an out-of-network pediatrician.

6. Create a College Savings Fund

Account for your child's college savings in your monthly and annual budgets. Add money to your child's college savings fund regularly, and you can increase the likelihood that you'll have the finances available to send your child to the college of his or her choice.

 

7. Purchase Life Insurance

If you purchase life insurance, you'll guarantee your family is financially protected if you suddenly pass away. Furthermore, include the costs of life insurance premiums in your monthly budget to minimize the risk of a lapse in coverage.

8. Cut Your Entertainment Costs

New parents can enjoy plenty of free entertainment, including trips to the library and playdates at playgrounds and local community centers. This free entertainment is fun for parents and kids alike. Plus, it may enable you to eliminate cable TV and other entertainment expenses.

Take advantage of these finance tips, and new parents can get their finances in order.