From husband to dad - How to manage your finances better

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By: Phil Bradford
on 19th Jun,2016

Father's Day is round the corner. Here are some pieces of financial advice for new fathers.
father's day

As per the U.S. Department of Agriculture's annual Expenditures on Children by Families report, "a typical middle-income family can expect to spend over $241,000 to raise a newborn child until age 18, and that doesn't even include prenatal care or college costs."

By looking at the above stats, you must have understood that raising a kid is not a child’s play. You are surely on cloud nine because you have stepped into fatherhood lately. Very well, hold your breath since it’s just the beginning and you have a very long way to go. Your journey as a father has just begun and the destination to become an outstanding father is far off.

After having a baby, things are not the same anymore. In case you are expecting a baby or perhaps the baby has just arrived, then you should take out time to arrange certain aspects of your life. Above all, you must pay attention towards your finances mainly because it’s mostly vulnerable to negligence. If not taken care of properly, then it can drag you to rags.

You are stepping into the shoes of a dad from a dual income no kid (DINK) category. You must handle your finances in a way so that it shouldn’t take a toll on you or your family. Raising a kid is a costly affair. So, take steps accordingly to manage your finances better.

Read also: How to talk about money when you’re dating or getting married

#Save as much as you can

First and foremost you should start saving money. Having a kid totally changes the way you manage your finances. Now, you should save more money for your kid’s education, parental care, and so on. If you can’t save more money at a time, then you must try to keep aside few dollars from your paycheck. It’s a wise option if you opt for automatic money transfer to your bank account. Try to be a smart saver. You should consider making the following moves:

  1. Build an emergency fund for your rainy days. Make sure it must cover at least six months of your living expenses.
  2. Save for your retirement. Even if you think that it’s too early to save for your gray hair days, you shouldn’t delay. Remember, the sooner you start saving money, the more you’ll be able to save. Don’t forget to contribute to your 401(k) account.
  3. Maintain a separate account for your kid’s expenses. It’ll get difficult for you to manage your finances if you keep all your expenses together such as household costs, bill payment costs, childcare costs, etc. To avoid getting into a financial mess, you should keep the above costs separate.
  4. Contribute to a 529 Plan. College costs are increasing day-by-day. To secure your child’s education, you should open a 529 Qualified State Tuition Plan and start saving from now onward.

Must read: Valuable financial lessons learned from father

#Get enough insurance coverage

If you are the main breadwinner of your family, then you must get insurance to cover life crisis like job loss, accident, death, or illness. You must have enough coverage for:

Health insurance

Medical insurance is important, no matter how healthy you are. Before buying a health insurance keep these things in mind:

  1. Go for cashless mediclaim.
  2. Choose an adequate amount as the sum insured.
  3. Opt for a health insurance with lifetime renewability.
  4. Keep individual health insurance.
  5. Choose a medical insurance plan, which is renewable after 65 years of age.
  6. Buy health insurance in the early stages of life to get the benefits of no-claims bonus.
  7. Purchase medical insurance from a company that offers minimum waiting period.

Homeowner’s insurance

Protect your home and your family members with the renter’s insurance in case of any calamity. Just remember:

  1. Go for a high deductible.
  2. Bundle your homeowner insurance policy with other insurance policies like car insurance to save money on the coverage cost.
  3. Consider a suitable coverage - an actual cash value policy or a replacement value policy.
  4. Know what coverage it’s providing.

Life insurance

Determined by your family’s size and the age of your family members, you should have a life insurance. Keep these things in mind:

  1. Before buying don’t forget to compare similar policies.
  2. Understand your needs.
  3. Decide the amount of coverage needed.
  4. Buy a policy from a reputed insurance broker.
  5. Read the terms and conditions thoroughly.

Disability insurance

Don’t let your disability ruin your child’s future. Purchase a disability insurance as early as you can. Keep a note of the following things:

  1. Buy it when you’re healthy.
  2. Evaluate your risk before buying.
  3. Analyze your average income.
  4. Give up your policy when you’re retired.

Car insurance

If you own a car, then purchasing a car insurance is a must. It’ll provide you coverage in case you meet with an accident or gets hit by an uninsured driver. Remember the following:

  1. Consider the factors that affect your rate, that is, driving record, geographic territory, use of the vehicle, gender, age, marital status, and so on.
  2. Ask for discounts.
  3. Search for more information regarding auto insurance.
  4. Ring the state insurance department to verify the authenticity of the company and the agent.

Read also: 6 Ways you might be increasing your insurance rate unknowingly

#Make things simple

Try to keep your financial surroundings simple and clutter-free. You must follow the below-given tips:

  1. Make a proper will.
  2. Be organized and maintain separate files for insurance policies, personal information, utility bills, credit card bills, and so on.
  3. Make it a point to share your personal details such as your bank account details, birth certificate, marriage certificate, Social Security Number, insurance policy details, and other personal and important information with the most trustworthy person you have.
  4. Review all your policies.

You have to accept the fact that you’re no more a dual income no kid family. You have a kid now, who ought to be your first priority. So, you should arrange your financial life according to the new member of your family.

Wishing you a Happy Fatherhood!

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