Women2Women - Summer 2017 - 16
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It's Budget Time...
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Baby
P
lanning for a baby is an exciting time for parents-to-be. The
days are filled with anticipation for the arrival of baby and
daydreams about the adventures to come. But many times
new parents forget to consider the costs of bringing a baby into this
world. Fortunately, there are many resources out there to guide new
parents on the financial journey of parenthood. If you choose to plan
ahead financially, that is one less challenge to face when the new
bundle of joy arrives. Being a CPA, and mother of "two under two,"
I've developed a list of essentials to consider as you budget for baby.
Insurance and Benefits
Even before the thought of baby, you should consider your current
health insurance benefits. Once the baby has arrived, you have 30
days to add the baby to your health plan and to sign up for flexible
spending accounts that allow you to save pre-tax for health care.
Research your disability insurance and ensure you have the right
amount of coverage to meet your expenses while out of work.
Additionally, life insurance is an important aspect of a financial
plan. Make sure yourself and spouse have coverage, and you may
want to add your child as a beneficiary. Consider also setting up a
will and/or trust.
Child Care
After baby has arrived, the biggest budget item to consider is child
care. If one parent is considering staying home to care for the baby,
experiment with living on one income well in advance of the baby's
arrival to determine how feasible it is. If both parents will return to
work after baby, and paid child care is needed, evaluate the options
in your area and within your budget. Many employers offer a flexible
spending account which can be used to pay for a certain amount of
child-care expenses a year using pre-tax dollars.
16 Women2Women Summer 2017
Education
Just like retirement savings, it's never too early to start saving for
your child's education. Think "compounding interest." Do your
research and explore the educational savings accounts available,
including a 529 plan.
Tax Advantages
As a family, you can save more money on your taxes. First, you
can take a tax exemption for your dependents. An exemption is
an amount of money you can subtract from your adjusted gross
income, for having dependents (in other words, reduce the amount
of income on which you will be taxed). If you elect to itemize your
deductions, medical expenses that exceed 10 percent of your adjusted
gross income are deductible. There are also deductions and credits
available for education and child-care expenses.
Baby Supplies
When it comes to baby supplies, review your budget and prioritize
the needs versus wants. Start with the monthly supplies which include
diapers, wipes, formula and baby food. In lieu of formula, consider
breastfeeding which not only will save you hundreds of dollars each
month, but also provides for countless health benefits for mother and
baby. If you elect to breastfeed, most insurance companies offer a free,
or reduced-rate, breast pump for each pregnancy. When shopping for
the other monthly supplies such as diapers and wipes, buy in bulk
and take advantage of manufacturer coupons and loyalty programs
which provide for savings on future purchases.
Outside of the monthly expenses, consider the larger one-time
purchases. First you will need a car seat to even take baby home from
the hospital. A priority in buying a car seat is safety and therefore
the best budget-conscious strategy would be to take advantage of
in-store sales.
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