If you are about to become a parent then you might have started to realize that kids are expensive and your pockets would be drained raising that kid. So, you should make sure that you do not fall on debt traps raising the kid which will in turn come as a huge burden on you and your family.
Here are a few financial planning strategies which can come to be of great use to you and act as a savior to save you from debts.
- Front Load Your HSA –
If you already having a birth plan and if it includes increasing your Health Savings Account(HSA) Contributions then you are on the right track.
If you’re on a high deductible insurance plan, piling up tax-free savings in your HSA is a great way to avoid having the delivery send to your medical debt.
Even if you have had your HSA for a while and feel like it is in good shape, adding a few extra contributions anyway is recommended.
Your annual HSA contribution is pro-rated by the number of months you are eligible to contribute.
However, you can still front load your HSA by pulling back funds or face taxes and penalties if you were not eligible every month of the year. You can withdraw excess contributions by the tax deadline to avoid the penalty.
- Start saving up your Emergency Fund if you haven’t yet –
You should always expect unexpected costs when you have kids. Having a monthly financial plan all set before the baby’s arrival is not enough. Consider starting an emergency fund specially for fulfilling the unexpected needs for the baby.
You might already have realized that after the baby arrives, you will have no fee time for yourself to keep a side gig for saving up extra dollars to add to the emergency fund so get on your feet now and take up a short-term side hustle to build up the emergency fund.
Yes, it might sound like a luxury to add extra dollars to your savings but in time of need, you will surely appreciate yourself for keeping the cushion already built around you.
- Set up Automatic Payments –
Now a days, keeping a mental checklist for all of your payment schedules is not enough and with all the sleepless nights you baby is going to gift you, it would really be a difficult job for you to remember those.
So, going automatic now is the best option for you to avoid penalties and late charges for bills that slip your mind.
Using a paycheck budgeting method can be the easiest option for you as it allows you to allot payments and savings according to when you get your paycheck.
4. Don’t make unnecessary spending by getting overwhelmed –
Yes, the first few years are memorable as your baby is growing and learning new things everyday and you photograph and make videotapes every now and then but you must keep in note of the fact that your baby will not remember any of it.
So, before planning for expensive holidays, buying the baby expensive things like more than one costume for Halloween, loads of presents for Christmas and celebrating unnecessary events (for example, the baby’s 6 months birthday) you must realize that there will be lots of big moments in your life and you should not face any financial crisis in those.
Just plan to give them a secure financial future and you and your kid will enjoy each moment with happiness, joy and without any stress.
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