All parents must contend with the cost of childcare, education, housing, and food. But there are some unexpected expenses that can blindside you if you’re not prepared for them. Here are some hidden costs that every parent should anticipate in advance!
The newborn utility bill spike When your baby first arrives home from the hospital (yay!), expect your utility bills to seriously increase. Chances are, your newest family member will require a cozy temperature all day to maintain their mood and sleep schedule. Plus, you’ll probably run a few extra loads of laundry and dishes every week! Before your child comes home, budget in some extra cash specifically for utility bills.
Birthday parties for preschoolers Nobody loves birthday parties more than preschoolers. If you’re not careful, you may end up paying far more than you ever expected on decorations, party favors, and gifts.
Come up with a budget-friendly gift giving strategy for your family early and stick with it. That might be placing a cost limit on what you give, or developing creative and heartfelt ways to make gifts from scratch.
Date nights will temporarily increase in cost Until your kids are old enough to look after themselves, you’ll need to hire a babysitter before you go on a date night.
There are responsible ways to save money on this often unexpected expense. If possible, have a family member look after your kids while you enjoy your romantic dinner. Also, consider swapping babysitting duties with a friend—you look after their kids on their date nights, they look after your kids on your date nights!
Extracurricular activities Music lessons, sports teams, and driver’s ed are sometimes far more expensive than parents realize. In addition to the upfront costs, you’ll also need to buy instruments, cleats, jerseys, and more to empower your kids to enjoy their favorite hobbies.
Create an extracurricular activities fund and start building it now. Then, decide how much you can pay each month for lessons and coaching.
What’s a parenting expense that caught you by surprise? I’d love to hear what it was and how you overcame it!
By now, you’ve probably noticed that there’s a lot that goes into caring for your newest family member. Between the diaper changes, sleepless nights, and feedings, take a few moments to make these critical financial moves. They may bring you the peace of mind and financial security your family needs!
Add your child to your health insurance coverage. Once your child is born, you have between 30 and 60 days to enroll your newborn in your health insurance plan.¹ Fortunately, it’s not a difficult task. Have your child’s birth certificate and social security number handy, and then call your health insurance provider. Share the good news that you’ve had a child and would like to add them to your plan. If your health insurance plan is through work, you’ll need to contact your HR department and go through the same process.
Find the right childcare for your family. Childcare can be pricey, ranging from $9,100 to $9,600 annually.² If both you and your spouse work, you’ll need to find a way to budget in this significant expense.
Review the costs of local daycare centers. Nannies are worth investigating, but can be more expensive than other forms of childcare. Consider asking your stay-at-home friends or family if they can tend to your children while you’re away from home. You might land a sweetheart deal that builds relationships and saves you money!
Protect your family with life insurance. There is no better time to consider life insurance than after the birth of your child. Raising a kid is expensive! Food, education, and clothing can require significant financial resources. The right life insurance policy can protect your family’s financial stability even if you pass away or if you get sick or injured and can no longer earn an income. Now’s the time to provide the financial security that your loved ones may need in the future.
The first few months of a baby’s life are crazy—they depend on you for everything! Just be sure to take some time between caring for their physical and developmental needs to tend to your financial concerns. It’s one of the greatest services you can offer them!
¹ “How do I sign my new baby up for health insurance?,” Nikki Davis, Bernard Benefits, Sept 2, 2020, https://blog.bernardbenefits.com/how-do-i-sign-my-new-baby-up-for-health-insurance
² “Child Care Costs by State 2020,” Procare Solutions, Jun 24, 2020, https://www.procaresoftware.com/child-care-costs-by-state-2020/
As you’re probably aware by now, growing a baby comes with serious financial responsibility. Here are a few expenses to anticipate and start planning for as soon as possible!
Prenatal care costs. Keeping both the mother and baby healthy throughout the pregnancy is a top priority. That means regular checkups and ultrasounds to make sure everything is progressing safely and normally.
Investigate what’s covered and what you’re expected to pay for beforehand. Health insurance policies will often cover prenatal care, but it’s best to find out what your expenses will be ahead of time. Out of pocket, prenatal care costs on average $2,000, so start preparing now!¹
Maternity clothes. Pregnancy requires a wardrobe overhaul for women that, on average, costs about $500.² Fortunately, there are commonsense strategies to cut back on this expense. Check local thrift stores for maternity options, and even consider buying flowy dresses or tops that are a size–or three–larger than your normal size. Also, ask family members if you can borrow their spare maternity clothes. Try to avoid designer maternity clothes which can come with a hefty price tag.
Delivery expenses. The cost of giving birth varies greatly—from $4,000 to $20,000 depending on your state and health insurance coverage.³ Again, it’s critical to consult with your healthcare and insurance providers to see what you’ll be expected to cover. The earlier you discover this information, the better—it gives you time to start saving for the hospital bill!
Budgeting for doctor visits, the delivery, and the hospital stay positions you to cover those expenses without having to borrow money. And that means you can provide your child a financially stable environment in which to grow, without the stress caused by unexpected medical expenses.
¹ “How Much Does it Cost to Have a Baby?,” Rickie Houston, SmartAsset, Oct 01, 2020, https://smartasset.com/financial-advisor/cost-of-having-a-baby#:~:text=The%20average%20price%20of%20having,and%20the%20hospital%20care%20fee.
² “Dressing for Two,” Stephie Grob Plante, Vox, Jan 30, 2018, https://www.vox.com/2018/1/30/16928328/maternity-clothes-pregnancy-miscarriage
³ “What It Costs to Have a Baby,” Heather Hatfield, WebMD, https://www.webmd.com/baby/features/cost-of-having-a-baby#1
But do you really need it? And how can you know? Let’s take a look at who does and doesn’t need the family and legacy protecting power of life insurance and some specific examples of both.
Protecting your dependants
Is there anyone in your life who would suffer financially if your income were to vanish? If so, then you have dependents. And anyone with financial dependents should buy life insurance. Those are the people you’re aiming to protect with a life insurance policy.
On the other hand, if you live alone, aren’t helping anyone pay bills, and no one relies on you financially to pursue their dreams, then you still might need coverage. Let’s look at some specific examples below.
Let’s say you’ve just graduated from college, you’ve started your first job, and you’re living in a new city. Your parents don’t need you to help support them, and you’re on your own financially. Should you get life insurance? If you have serious amounts of student or credit card debt that would get moved to your parents in the event of your passing, then it’s a consideration. You also might think about if you have saved enough in emergency funds to cover potential funeral expenses. Now would also potentially be a better time to buy a policy early while rates are low, especially if you’re considering starting a family in the near future.
Married without children
What if your family is just you and your spouse? Do either of you need life insurance? Remember, your goal is to protect the people who depend on your income. You and your spouse have built a life together that’s probably supported by both of your incomes. A life insurance policy could protect your loved one’s lifestyle if something were to happen to you. It would also help them meet lingering financial obligations like car payments, credit card debt, and a mortgage, even if they still have their income.
Single or married parents
Anyone with children must consider life insurance. No one relies on your income quite like your kids. It’s what clothes them and feeds them. Later on, it can empower them to pursue their educational dreams. Life insurance can help give you peace of mind that all of those needs will be protected. Even a stay-at-home parent should consider a policy. They often provide for needs like childcare and education that would be costly to replace. Life insurance is an essential line of defense for your family’s dreams and lifestyle.
No one wants to think about what would happen to their business without them. But entrepreneurs and small business owners can use life insurance to protect their hard work. A policy can help protect your family if you took out loans to start your business and are still paying down debt. More importantly, it can help offset the losses if your family can’t operate the business without you and has to sell in poor market conditions.
Not everyone needs life insurance right now. But it’s a vital line of defense for the people you care about most and should be on everyone’s radar. The need might not be as urgent for a young, debt-free single person, but it’s still worth it to start making plans to protect your future family. Contact a financial professional today to begin the process of preparing!
It helps protect your family during the grieving process, gives them time to figure out their next steps, and can provide income to cover normal bills, your mortgage, and other unforeseen expenses.
Here are some guidelines to help you figure out how much is enough to help keep your family’s future safe.
Who needs life insurance?
A good rule of thumb is that you should get life insurance if you have financial dependents. That can range from children to spouses to retired parents. It’s worth remembering that you might provide financial support to loved ones in unexpected ways. A stay-at-home parent, for instance, may cover childcare or education costs. Be sure to take careful consideration when deciding who should get coverage!
What does life insurance cover?
Life insurance can be used to cover a variety of unexpected expenses. Funeral costs or debts can potentially be financial and emotional strains, as can the loss of a steady income and employer-provided benefits. Think of life insurance as a buffer in these situations. It can give you a line of defense from financial concerns while you process your loss and plan for the future.
How much life insurance do you need?
Everyone’s situation is different, so consider who would be financially impacted in your absence and what their needs would be.
If you’re single with no children, you may only need enough insurance to cover funeral costs and pay off any debts.
If you’re married with children, consider how long it might take your spouse to get back on their feet and be able to support your family, how much childcare and living expenses might be, and how much your children would need to attend college and start a life of their own. A rule of thumb is to purchase 10 times as much life insurance as income you would make in a year. For instance, you would probably buy a $500,000 life insurance policy if you make $50,000 a year. (Note: Be sure to talk with a qualified and licensed life insurance professional before you make any decisions.)
An older person with no kids at home may want to leave behind an inheritance for their children and grandchildren, or ensure that their spouse is cared for in their golden years.
A business owner will need a solid strategy for what would happen to the business in the event of their death, as well as enough life insurance to help ensure that employees are paid and the business can either be transferred or closed with costs covered.
Life insurance may not be anyone’s favorite topic, but it can be a lifeline to your family in the event that you are taken from them too soon. With a well thought out life insurance policy for you and your situation, you can rest knowing that your family’s future has been prepared for.
Milestones like buying a home, having a baby, and saving for the future can bring brand new challenges. A solid life insurance strategy can help with accommodating the needs of a growing family in a new phase of life. A life insurance policy’s benefits can:
Replacing the loss of income provided by a stay-at-home parent is just as important. According to Salary.com, if a stay-at-home mom were to be compensated monetarily for performing her duties as a mother, she should receive $143,102 annually. That number factors in important services like childcare, keeping up the household, and providing transportation. Sudden loss of those services can be devastating to the way a family functions as well as expensive to replace. Stay-at-home parents need life insurance coverage, too. Contact me today to learn more about getting the life insurance coverage you need for your family and building a financial plan that will provide for your loved ones in case a traumatic life event occurs.