DANESHVAR LAW’S FINANCIAL AND LEGAL TO DO LIST FOR NEW PARENTS
A growing family requires a reassessment of one’s personal finances for good reason. According to 2011 figures from the Department of Agriculture, the estimated annual cost to raise a child is $12,290 to $14,320 for an average-income family. That’s why it’s crucial to make sure you take care of your family’s financial and legal needs. Here’s a quick to do list for new parents to use with the birth of each child.
1. Obtain a Social Security Number for your child
Get your child’s Social Security number as soon as possible because it will entitle you to several tax benefits that will help with some of your new child-rearing costs. It will also allow you to open up a bank account for them.
2. Review Employer Benefits & Paychecks
It’s time to increase the number of allowances you check off on your W-4 form at work. This will increase the amount of your take-home pay in response to the increased deductions you’ll receive for the child. Don’t forget to add your child to your health insurance plan, and review possible plan changes. Check to see if your pediatrician is on your current plan, and if so, check to see what’s covered.
You may also what to sign up or increase the amount you put into a flexible spending account (FSA) for health care if it’s available at work. With an FSA, pre-tax dollars are set aside from your paycheck (up to $3,000 for medical and $5,000 for child care). You withdraw funds tax free from the accounts as you incur qualified expenses.
3. Add your Child as a Beneficiary and Increase your Insurance
Increase your life insurance to provide for the future needs of the child in your absence. Of course, don’t forget to also add your child as a beneficiary. It’s also a good idea to increase disability insurance.
4. Create or Update Your Will
A will allows you to designate a guardian for your new child in your will in the event that you and your spouse die. You also may want the will to establish a trust to manage estate assets for your child should both of you die before your child is old enough to manage the inherited assets.
5. Start Saving for College
Start saving money for college. Consider looking into a 529 Plan. A 529 Plan is a tax advantaged education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs.