Planning to bring home a new baby is one of the most exciting times for expecting dads. But, it can also be a bit intimidating and scary to be physically and financially supporting another life. The good news is you can help ease those financial fears with proper planning. Here are 4 things new fathers should do to prepare for the next stage of life with a little one.
Determine Your New Budget
Raising a child isn’t cheap. So it goes without saying that bringing home a newborn will drastically change whatever budget you already have in place. There will be one-time costs to plan for, like medical bills for delivery, but when you adjust the budget, be sure to consider ongoing monthly costs, like:
- Diapers
- Formula/food
- Clothes
- Childcare
- Toys/entertainment
- Increases in healthcare spending
Once you have an estimated monthly budget, you’ll be able to determine if you’ll need to increase income to support your new child or if you have enough wiggle room where you stand.
Assess Your Emergency Fund
If you don’t already have an emergency fund in place, now is the time to start one. An emergency fund is crucial for financial stability as it prevents you from taking on debt to deal with life’s unanticipated expenses. When you add a baby to the mix, it’s even more necessary since kids seem to have way more accidents and injuries than adults.
For those who already have an emergency fund, you may want to look at bumping it up. When you go from supporting a family of two to three, your monthly living expenses will increase. Since the recommendation for an emergency fund is 3-6 months of living expenses, you’ll want to review your updated budget to see how much more you’ll need.
Consider Life Insurance
When it comes to planning for a new baby, you’re growing the number of people who depend on you, whether you’re a primary earner, primary caregiver, or sharing both duties with a partner. That means you should consider buying a life insurance policy if you don’t already have one, or if you have a policy that doesn’t offer more coverage, buying an additional term life insurance policy with more coverage may be a good option. Making sure your growing family will be covered financially in the event of your untimely passing will give you peace of mind.
Term life insurance offers coverage for a limited window of time, usually several decades, which makes it a good fit for adding coverage while your child is growing into financial independence. Not sure how much life insurance you need? You may want to speak to a financial advisor to weigh your options.
Create or Update Your Will
Bringing a child into the world is the perfect time to create or update your will. A clear and up-to-date will can protect your family and, specifically, your new child if something happens.
In addition to determining how your estate will be divvied up, your will can also allow you to designate a legal guardian for your new baby in the event of both you and your spouse’s untimely passing. And that means you’ll have peace of mind knowing your child will be raised by the person you choose, and it won’t be left to the fate of the court to decide.
The Bottom Line
Adequate financial preparation for your newborn can be the difference between celebrating the first joyous weeks in peace and being stressed.
As a new father, be sure to build your new baby budget, assess your emergency fund, consider life insurance, and create or update your will. By taking these steps, you’ll alleviate some financial stressors and feel more at ease. But sadly, we can’t make any promises that you’ll be sleeping peacefully through the night.
