How to Manage Your Finances When You’re Expecting?
Expecting a child is a tremendously exciting and nerve wrecking moment in one’s life, and even nine months may not feel like enough time to adequately prepare. Your family grows, and so do your hopes, goals, and worries.
While you may be preoccupied with worries about your baby’s health, your role as a parent, and the person your child will become; one of the most pressing concerns you will have is the cost of raising a child.
As you prepare to welcome your baby into the world, here are some essential financial issues to consider.
Budgeting for Healthcare Expenses
It’s crucial to understand your health insurance coverage to know what to budget for pregnancy, birth, and postnatal care.
Request a cost estimate for pregnancy and maternity care from your insurance provider. The following are some essential points:
- Prepare to reach the out-of-pocket limit if you have a high deductible plan.
- Expect to pay less on costs if your pregnancy goes into a second calendar year, as your deductible will most likely reset on January 1.
- Check to see if the doctor and hospital you want to attend to are in your insurance’s network.
- To ensure that your child is covered, you must add them to your health insurance plan within 30 days of birth.
Besides the health care costs, there are lot of additional costs of raising a child, that one should be prepared for.
Budgeting for Education Expenses
Education is expensive, but you can make it more manageable if you start saving early. It is essential to set aside some money for college depending on your views on education and how much you want to pay. When it comes to saving for education, time and compounding are your best friends.
It’s good to create a fund for your children’s future education, but it shouldn’t take priority over everything else. Learn how to balance saving for education with saving for your retirement.
Getting adequate Life Insurance
Having adequate life insurance becomes even more critical once you become a parent. If something unexpected happens, you’ll want to be sure you have enough coverage to support your child.
The purpose of life insurance payouts is to replace any income that you would have provided to your family if you hadn’t died. As you assess the amount of life insurance you want to purchase, you must consider factors such as:
- Your family financial contributions each month
- Amount of money you plan to put aside for your children’s education
- Other costs that you expect to incur while your children are still reliant on you
- Consider economic inflation when it comes to your bills and other expenses.
A good rule of thumb is to purchase coverage that will cover your child’s expenses until they reach the age of 22 so that at least their living and basic undergraduate degree is paid for. The amount will vary depending on the circumstances of each individual.
Preparing a Will
To begin, the ideal time to prepare a Will is as soon as you become a legal adult. However, as soon as you have dependents, it is extremely important to get a Will ready. Unfortunately, many people in the United Arab Emirates pass away without leaving a legal Will. That leaves family members grieving while also responsible for several actions they may not have anticipated.
A Will can help avoid this from happening by allowing you to name a healthcare proxy, name a power of attorney, and specify how your possessions and money will be distributed.
It is always good to hire a financial advisor when you’re expecting as it will free up time to focus on significant aspects of your life.
It can also help relieve any financial stress you may be experiencing because a skilled financial advisor will get your finances in order and keep it that way for the rest of your life.