Financial success with a new baby usually means doing more than just revamping your budget. Instead, you need to address not only your changing current needs but also what the future will inevitably hold. That way, you can maintain financial security long-term, ensuring you are ready for all of the costs and obligations that come with raising a child. If you aren’t sure where to begin, here are some tips for achieving financial success for newlyweds with a new baby.
Review Your Finances
Before you take any other steps, you need to assess your current financial situation. In order to achieve success, you need to both handle your existing obligations and plan for the future. However, the former usually has to take precedence.
Review your household income, debts, and monthly recurring expenses. Factor in retirement planning, as well as shifts in your healthcare costs that usually come with having a child. That way, you have a solid foundation.
If your monthly budget is tight, then you may also want to seek out opportunities to save. Cost-cutting can give you more breathing room, so consider eliminating any luxurious, negotiate better interest rates on debt, or take other similar steps to get your core financial house in order.
Outline Short- and Long-Term Goals
Once your finances are generally in a good position, it’s time for goal-setting. Consider what you want for yourselves and your child, both soon and into the future.
Usually, you’ll want to begin with a solid emergency fund. That way, you can handle unexpected expenses with ease.
After that, you may want to explore college savings plans, create a savings account for specific goals, like having family vacations, and take other steps to ensure that funds are allocated to the right purposes. Precisely what those goals will be depends on your priorities. However, by starting now, even small amounts put into savings each month can make a big difference in the end.
Find a Balance
Many new parents focus heavily on their child’s short- and long-term needs. While taking steps like opening a college savings account is wise, you shouldn’t necessarily sacrifice your financial wellbeing to make it happen.
For example, don’t stop contributing to retirement to make saving for college possible. If you go that route, you could find yourself in dire financial straights later in life, which isn’t ideal.
Instead, find other opportunities to save so that you can free up a little bit of cash to make saving for college an option. Even if you only set aside $20 a month in a 529 College Savings Plan, over the course of 18 years, assuming just a 5 percent return, you’d have more than $7,100 set aside, suggesting you never increased your monthly contribution. If you can afford $50 a month, that would total out to around $17,800 instead.
Newlyweds With a New Baby Can Have Financial Success
Ultimately, while you may need to start small when handling certain savings goals related to your child, that may be the best approach. It allows you to balance your and their needs, ensuring financial success for all.
Do you have any tips that can help newlyweds with a new baby plan for financial success? Share your thoughts in the comments below.
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