Consider the added expenses if you're considering having a baby.
Aug. 16, 2019 Whitepaper

Educating the Next Generation: Financial Considerations for Soon to be Parents

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The birth of a child is an exciting, and oftentimes overwhelming, time. Addressing the following items may help provide peace of mind so you are free to focus on caring for your new bundle of joy. 

After you bring your child home, here are some things to consider: 

  • Create a will and identify guardians for your child(ren). Consider any additional children who are not yet born. 
  • Make necessary changes to other estate planning documents to account for the new addition to your family.
  • Update account beneficiaries, if necessary, to include any children. It’s common for a spouse to be named as the primary beneficiary, while children are included as secondary beneficiaries. 
  • Consider life insurance for you and your spouse to help provide for your children and those who would take care of your children should something happen to you. 
  • Assess your current living situation and determine if you’ll need to make changes to accommodate your new addition. Is there space in your house for the baby, or will it be necessary to remodel or move? Is your current car large enough to accommodate a car seat? 
  • Consider childcare options and start planning early. Will both parents work once the child is born? If so, it’s wise to begin evaluating childcare options as soon as possible. Newborn and infant care centers often have a low child-to-provider ratio, and these spots tend to fill up months in advance. Another option to consider is hiring a nanny to come into your home, but it may take some time to find the right person. 
  • Understand your employer’s parental leave policies. Be sure you know how many paid weeks your employer offers for parental leave and whether you are eligible for additional time off through the Family Medical Leave Act (FMLA) or short-term disability. 
  • Consider contributing to a flexible spending account, a health care savings account and/or a dependent care account. These accounts allow participants to make pre-tax contributions from their paychecks and be reimbursed for medical and/ or dependent care expenses, therefore reducing the amount of taxable income. Be careful when estimating your annual expenses, however, as these accounts may operate on a “use it or lose it” basis. Your wealth advisor can provide guidance regarding whether these strategies make sense for you based on your annual income and applicable income tax laws. 
  • Open a 529 plan. Even if you don’t need the additional savings, there are multiple tax benefits associated with funding a 529. For example, if you live in New York and contribute to the state’s 529 plan, you may be eligible to deduct up to $5,000 ($10,000 for joint filers) from your New York income tax return. Your wealth advisor can help you navigate any 529 tax savings strategies that may apply to you.  

From cribs to college and beyond, Mariner Wealth Advisors is your partner in planning for every life stage. We’re here to help you build a secure financial future for your loved ones. For more information about how we can help you achieve your personal financial objectives, both today and long into the future, please contact us.

 

Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about specific 529 plans is available in each issuer’s official statement, which should be read carefully before investing. 

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