Expecting and new parents face a lot of financial challenges. From ensuring that the baby’s needs are taken care of to setting aside money for future college tuition, it can take a lot of work to keep up with all the costs of having a child. However, making decisions today, like building an emergency fund or picking a life insurance policy, can help financially secure a child for years to come. Here are five financial tips for expecting and new parents.
1. Build an emergency fund
Nobody knows what life has in store, so it’s important to set aside savings in case of an emergency. Stocking away three to six months’ worth of living expenses ensures preparedness if something comes up. Start by setting aside a small amount of money each month to gradually build an emergency fund. As finances allow, increase the amount set aside each month until reaching the desired level of savings.
2. Maximize tax benefits
Make sure to understand any tax benefits available when becoming a parent. Opening a 529 or other college savings plan for a child can help reduce the amount of taxes paid each year.
Another way to maximize tax benefits for expecting and new parents is to take full advantage of the Earned Income Tax Credit, a federal income tax credit for families with qualifying incomes. Additionally, claiming dependents on taxes can provide significant tax deductions and credits when filing taxes.
3. Get life insurance
Getting life insurance coverage is vital in case something happens. A life insurance policy ensures that family is taken care of financially if anything happens while children are still young. Make sure to understand the tax implications of any life insurance policy. Ask questions to a financial advisor like, does one pay taxes on life insurance? And what are the tax deductions?
4. Start saving for college tuition
Set aside some money for future college tuition costs for children. Even if it’s just a small amount each month, it will add up over time and help them attend college when the time comes. New and expecting parents can start saving for college tuition by setting up a 529 plan. Additionally, they should consider opening a savings account specifically dedicated to their child’s college education and begin contributing regularly.
5. Manage student loans
Paying for college can be difficult, but understanding all options for repayment can help. Some options include income-based repayment plans and deferment for anyone with student loans from previous college education. Budgeting income and expenses can be a helpful way to track repayment progress. Making extra payments on the loan can help pay off the loan faster and reduce the amount of interest accrued over time.
By following these five tips, expecting and new parents can set themselves up financially through their child’s infancy and beyond. Taking steps now to ensure financial security in the future will pay off significantly down the road.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact a local Aflac agent.???
Life – 68000 Series – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100- A68400. In New York, NY68100-NY68400. Term/Whole Life – B60000 Series – In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life – Q60000 Series – In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Group Term Life Q60000 Series – In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Aflac insurance coverage is underwritten by Aflac. In New York, coverage underwritten by Aflac New York.
Aflac | WWHQ | 1932 Wynnton Road | Columbus, GA 31999