How A Baby Will Affect Your Financial Future

As a new parent are you aware of how a baby is going to impact your financial future? Statistics for the United States, show that on average, raising a child is about 15k per year!

From my own experience, that seems low, I used to pay $1200/month in childcare alone. We need to be prepared and take the right steps because having a healthy, happy baby is also making sure that your baby is set up financially. 

There’s nothing cheap about having a baby. 

It all starts even before the baby arrives, you now have medical bills that you probably never really incurred before the arrival of a baby. Now you’re starting to think about how you’re using your medical insurance, deductibles, FSA, HSA, whatever it is that you use. It’s going to continue at least for the first year of your baby’s life because you’ll be visiting the Pediatrician about every 2 months.

We interviewed my friend and financial analyst Jenny Escobar, to bring you the facts for a healthy financial future for your family!  I love her because she makes it fun and she’s so funny that you can’t help but listen to what she has to say!  Plus, she makes it make sense. 

Let’s talk a little bit about finances and babies because they go hand in hand. As parents, we always want the best for our kids, starting with the baby registry where we want the best strollers and car seats. You know how expensive those items are alone, right? They’re an arm and leg!  So we have to make sure that we are thinking way ahead in the future and planning how we’re going to have all of these things available for your little one.  Whether you buy the $200 version or the $1,000 version of a stroller doesn’t really impact your kid.  We just want everything to look nice for the pictures but your baby will have no clue as to which stroller he was pushed in. I always talk about how I had three strollers. I had a jogger, I had a fancy one, and I had the umbrella stroller. The umbrella stroller was the best one out of all of them because it was the easiest to use. It was the most useful one and the one that probably got used the longest and guess what it was the cheapest! 

So why are we talking about this? Because sometimes we try to keep up with the Jones’s but we don’t realize that the Jones’s are broke. We want the pretty pictures and we want everything to look so nice that we’re willing to spend enormous amounts of money on things that are not really important.  We’re not saying, don’t spend any of your money, just save it, and never have fun. The challenge comes when we are living above our means and we have to use credit cards, and that’s an issue.

Some of the tips that I want to give parents are just setting them up for being on a good, healthy financial track when it comes to them now having a baby and growing a family. I want to start off with whether or not as a parent, you need to start thinking about making a will and think about how will take care of your family if God forbid you were no longer here. No one wants to think about that, but we definitely need to make sure that we’re caring for our family, even if we’re not here physically anymore.

We need to set up a trust and guardianship too. If both parents were to pass away, who is going to be the person responsible for your child? We leave that decision up to God, because we think that’s never going to happen to us.  I’ve been in this industry for 22 years, and I’ve had a handful of my personal clients pass away during that time. You don’t want to leave these decisions for your children or a state appointed representative to make. I know personally how it made me feel to think about this, because you start thinking, the worst of the worst. There are people who think, if I have a will, maybe then I’m even allowing this to occur in my life. I think people get very scared, they don’t want to start thinking about who they would leave their children to, because it is a process of having to ask and think about who would be good providers, or a good support system for your children.

Next let’s discuss life insurance. It’s very important to understand that life insurance is based on your age and your health. The younger you are, the less expensive it’s going to be.  That means today, is the cheapest it will be for you if you haven’t got a plan yet.  I’ll give you my quick example, my personal story. I bought life insurance before getting diagnosed with cancer at age 36. My daughter was two years old at the time. Now, could you imagine the irresponsibility on my end not having gotten it before that?  Had I passed away, nothing would be left to my daughter except my assets. Life insurance is very important, so we need to get it now!  The other thing to consider is that most people say, well, I have life insurance at work. Great! Life insurance at work is just as secure as your job is, right? Especially these days. Most people don’t know if you happen to pass away and you’re on some kind of leave, like a maternity leave for example, it doesn’t count. You have to be physically working even though you’re still employed. Do you want to pay $30 a month for insurance, or do you want to pay $300 later with the possibility of never being able to qualify if you happen to have a serious illness?

Get into a habit of creating a budget and making sure to stick to it.  I remember the first time I had to create a budget that’s when reality really hit me, “I spent that much money on going out to eat?” Peace of mind is priceless. You want to make sure that you are responsible for your family and that you are setting them up, even if you’re not here. We need to take on this responsibility and do the right things for our children at every cost. You have to make sure that you’re being responsible, that you’re being mature, that maybe you don’t need that extra night out, but your child does need to be set up if, God forbid, you weren’t here. 

Now let’s talk about college, because everybody wants to know, do I really need a college fund for my kid? This is a tricky one. Before I even suggest that college is important, because it is, we need to start saving or investing in our own retirement. Remember that when you retire, you cannot get a retirement loan. You should be thinking about yourself too. Your child can get student loans later, scholarships, grants etc. They can work part time and pay for it.  If you start when the baby is young, then you can save a significant amount of money in 18 years. Let’s say $100 a month, because of the power of compounding interest. So start early then you’ll save a significant amount by the time your child is ready to start college.  The point is you also need to save for your retirement too!

Make good decisions early on, and then you can figure it out as time goes on. 

Having someone guide you and support you making these decisions it is super important. 

Jenny is offering a complimentary financial analysis, to anyone who registers for the Dancing Into Parenthood Community!  Complimentary, which is just a fancy word for free. It’ll be a blueprint, and we will stay in touch for as long as they need in order to reach their goals and dreams!

Everyone can find Jenny Escobar on Facebook: @Jennyaescobar and on Instagram: @Jennythingizpossible and her cell phone number,is 646-318-8392. This is a 24/7 operation, so you can reach out at anytime. 

To watch the vlog with Jenny and Dr. Lopez you can access it directly when you join the Dancing Into Parenthood Community!