When the Stork Comes… Be Prepared!

Baby on the way? Studies show that fall babies live longer and are taller, on average, when compared to their winter, spring, and summer-born peers. Although that may not ring true for every autumn baby, one thing that would be hard to contest is that bringing a child into the world is one of the heftiest responsibilities one can encounter. As a new or soon-to-be parent (or grandparent!), butterflies and nerves are par for the course. One way to calm these worries is to know your family is better prepared financially by addressing the four areas below.

  1. Underinsurance. Studies find that young parents don’t own enough life insurance. It is common that young parents rely solely on their employer group plan, and while this is a start, many times these plans do not offer large enough benefits to supplement the loss of the breadwinner’s income. Additionally, both spouses should be insured. Even if one spouse stays home, there may be a future need to cover the cost of day care or other services. Term insurance is a good solution as it is inexpensive and the term is flexible, so it can be adjusted to last only as long as you will need it. (For more information on what life insurance to choose, we’ve written a blog which you can find here.)
  1. Estate Plan. Estate planning is a dreaded topic among many, yet it becomes extremely important once a minor is brought into the situation. Many young families don’t think to create a Will, but every parent should have one. A Will names a guardian for your children and also gives direction to the State in the transfer of your wealth. Should you and your spouse die without a Will, the state will appoint a guardian for your children and follow the laws of intestacy for your assets. You should work with an estate planning attorney to get a Will in place (and potentially a Trust, and Powers of Attorney for Healthcare and Property).
  1. No Budgeting. Spending can go off the rails pretty quickly without a close eye on it, especially when you add diapers, baby clothes, and baby food purchases to the mix. Young families tend to avoid putting in place a plan in regards to spending and saving. Address the situation head on by building a budget using a site like mint.com. Start small – every little bit counts – and accumulate a rainy day fund of cash to cover 3-6 months of living expenses. You will thank yourself later!
  1. Health Insurance. Don’t forget to add your child to your health insurance plan. Depending on how you are supplied health insurance (through your employer, from the marketplace, or directly from the insurer), you have a 30-60 day window after birth to add the baby to your health insurance plan. The baby is not automatically covered, and if you miss the deadline, there could be steep consequences.

This is an exciting time in the lives of new parents. If you take the time to prepare before your bundle of joy comes, you can take control of a hectic situation and enjoy a special time in your lives. Let’s be honest, you have a few child-induced headaches coming your way, you don’t need them to start right off the bat!


Kristina Caragiulo, CFP® is a Senior Planner who joined the BDF team in July of 2015. As a Senior Planner, some of Kristina’s responsibilities include providing analysis to clients in the different areas of financial planning, maintaining client relationships, and trading and rebalancing client investment accounts. Kristina received a Bachelor of Science degree in Agriculture and Consumer Economics with a concentration in Financial Planning from the University of Illinois at Urbana-Champaign. She is a CERTIFIED FINANCIAL PLANNER™ professional.