Newborn- essential financial steps

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uberdoc
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Newborn- essential financial steps

Post by uberdoc »

Hi,

We have a 1 month old daughter now. Beyond 529 account, are there any other financial steps that would be useful at this time?

Thank you.
Hillview
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Re: Newborn- essential financial steps

Post by Hillview »

life insurance
will/estate plan (at least a plan for who would care for the child should you both have an unfortunate accident)
livesoft
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Re: Newborn- essential financial steps

Post by livesoft »

Get her a job modeling and posing for photographs for advertisements.
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arcticpineapplecorp.
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Re: Newborn- essential financial steps

Post by arcticpineapplecorp. »

livesoft wrote: Fri Apr 20, 2018 7:52 pm Get her a job modeling and posing for photographs for advertisements.
...and then take the money she earns modeling and invest it in a Roth IRA.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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arcticpineapplecorp.
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Re: Newborn- essential financial steps

Post by arcticpineapplecorp. »

Hillview wrote: Fri Apr 20, 2018 7:48 pm life insurance)
This may be obvious to most but the life insurance is for you, not your newborn. I'm mentioning this since I can't tell you the number of people who buy insurance through Gerber for their newborn. Don't do that. Insurance is for replacing income. If your child doesn't have income, s/he doesn't need life insurance.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Nearly A Moose
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Re: Newborn- essential financial steps

Post by Nearly A Moose »

Unless you're just extremely flush with cash, do some budget projections on what your expenses will look like under various childcare and school scenarios. Depending on where you live, the cost can be astounding. That exercise might cause you to build up a bit of a baby warchest to help smooth out expenses down the road.

Depending on your circumstances and thoughts on sharing money with adult children, you might read up on White Coat Investor's "Twenties Fund" concept.

But mostly just enjoy it, get rest whenever you can, and remember your spouse is also exhausted too...
Pardon typos, I'm probably using my fat thumbs on a tiny phone.
veindoc
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Re: Newborn- essential financial steps

Post by veindoc »

Congratulations!

Agree with above. Make sure your child is well taken care off if you are disabled or unexpectedly pass away. There is some wording on estates/wills that includes future children.

Did you check if your beneficiaries were up to date? I found an old account that listed my brothers as beneficiaries instead of my husband. Oops. That was just last year.

Update the plan every five years at least. We just updated ours, written when our first was three months old, and he is now nine. We designated my sis in law to take care of the kids back when she had two and we had one. Now she has four and we have three so we changed it to my brother (unmarried at the time) and his wife. So far they only have two so should be able to manage.

I still would save as much as you can and maybe more. Things change. I feel like my kids need me more now than they did when they were babies and that was unexpected, hence I scaled back work to work less and consequently now make less. Happy that we saved at a high rate early on. It’s paying dividends.

Know that kids can get expensive as they get older. My two oldest are voracious readers. We go to the library weekly but I also buy them books because they like to read their favorites over and over again. I swear I can drop $200 at Barnes and nobles on a Saturday and by Sunday evening my oldesr will complain he’s bored again because he read all his books.
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BL
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Re: Newborn- essential financial steps

Post by BL »

Life insurance should be term insurance. Check term4sale.com for an idea of cost at various choices. Also consider using a local independent insurance agent who can shop for the best policies for you among several high-rated companies.
Hillview
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Re: Newborn- essential financial steps

Post by Hillview »

Life insurance for you should be fixed term (as in the premium does not change). 20-30 years (closer to 30 if you plan to have more kids), partner/spouse should also consider life insurance.
mortfree
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Re: Newborn- essential financial steps

Post by mortfree »

I created a savings bucket when we found out my wife was pregnant b/c I didn't know what to expect.

I put $100/month in there just as a way to earmark unexpected expenses.

It helped from a mental accounting perspective as I had plenty of Cash Savings/EF (YMMV).

There were unexpected dr visits, a few emergency room visits, prescriptions, fun gifts, zoo visits, etc in the first two years or so.

I stopped that bucket around age 3 and just roll with it now, but that helped me.


And I got term life insurance for myself (20 year term).
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GCD
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Re: Newborn- essential financial steps

Post by GCD »

arcticpineapplecorp. wrote: Fri Apr 20, 2018 7:54 pm
livesoft wrote: Fri Apr 20, 2018 7:52 pm Get her a job modeling and posing for photographs for advertisements.
...and then take the money she earns modeling and invest it in a Roth IRA.
BTDT. If you are trying to model on the open market, it tends to be highly inefficient. If you have your own business and can use the kid in advertising and pay them market rates for modeling while skipping the go-sees, travel, etc. then it's a smart move.

arcticpineapplecorp. wrote: Fri Apr 20, 2018 7:57 pm
Hillview wrote: Fri Apr 20, 2018 7:48 pm life insurance)
This may be obvious to most but the life insurance is for you, not your newborn. I'm mentioning this since I can't tell you the number of people who buy insurance through Gerber for their newborn. Don't do that. Insurance is for replacing income. If your child doesn't have income, s/he doesn't need life insurance.
Like modeling? :D

Also, insurance for a non-income producing spouse is a good idea if they are providing services that would cost money to replace (maid, child care, chef, lawn care, etc.).
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uberdoc
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Re: Newborn- essential financial steps

Post by uberdoc »

Thanks for your replies. A separate fund for unexpected expenses is a good idea. She can only model for some anti wet burp products at this time anyway. My spouse has life insurance and I am in process of getting mine.
Beyond finances, any other suggestions such as getting a passport done etc?
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BolderBoy
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Re: Newborn- essential financial steps

Post by BolderBoy »

uberdoc wrote: Sat Apr 21, 2018 8:00 amMy spouse has life insurance and I am in process of getting mine.
Very large value policies, right? $2 million or more on each of you.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
Hillview
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Re: Newborn- essential financial steps

Post by Hillview »

Passports depend on when you will travel. They are valid for 5 years for young kids. Get several copies of the birth certificate. Start looking into child care if you both plan to work. Take lots of photos (spurge for a professional photographer -- can find one via facebook for $200 often). Enjoy the time!
iamlucky13
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Re: Newborn- essential financial steps

Post by iamlucky13 »

Some recommend a credit freeze, since your newborn shouldn't need credit inquiries for quite a few years, but there is a chance of their identifying information being compromised (eg - Premera data breach).
veindoc
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Re: Newborn- essential financial steps

Post by veindoc »

BolderBoy wrote: Sat Apr 21, 2018 10:13 am
uberdoc wrote: Sat Apr 21, 2018 8:00 amMy spouse has life insurance and I am in process of getting mine.
Very large value policies, right? $2 million or more on each of you.
They should just buy what they need. I never had more than a million dollar policy and over our lifetime one of us working full time would easily make tens of millions. The reason for not buying an excessive amount of insurance was that if one of us dies, the other one could work. As physicians we are very employable. The life insurance was in place to pay the mortgage and give the grieving spouse the opportunity to scale down work if need be. Life insurance is not super expensive so we could have easily afforded more but why buy more if u don’t need it.
Loik098
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Re: Newborn- essential financial steps

Post by Loik098 »

uberdoc wrote: Sat Apr 21, 2018 8:00 am Thanks for your replies. A separate fund for unexpected expenses is a good idea.
Not just unexpected expenses. You should EXPECT to pay for things like braces, ER visits for broken arms, expensive school activities, etc. Unless your cash flow isn't an issue, better to have a fund for these things started now rather than have to raid your e-fund later for them. I can't tell you how many times I hear other parents complaining about big childcare expenses because they didn't plan for them when the kid was younger. There's also no guarantee your job situations will be what they are now in 5-10 years from now.

We have multiple Ally savings accounts (under one sign-in) for different savings buckets. While not necessary, this may work for you as well.
uberdoc wrote: Sat Apr 21, 2018 8:00 am
Beyond finances, any other suggestions such as getting a passport done etc?
1) While a tad personal, make sure you have regular conversations with your partner about the new workload that comes with having a child, and try never to take advantage of "the way things are." The workload doesn't ever go away, it just changes in nature over time. Always be certain that your partner is happy with how the workload is shared.

2) Have a plan for how much screen time your child will get and make sure both of you are on the same page with it.
smackboy1
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Re: Newborn- essential financial steps

Post by smackboy1 »

uberdoc wrote: Fri Apr 20, 2018 7:28 pmWe have a 1 month old daughter now. Beyond 529 account, are there any other financial steps that would be useful at this time?
For both you and your spouse:

Wills - naming guardian for your children. Name multiple successors.
Life and Disability Insurance - In case one/both of you become disabled or die. Make sure to title life insurance properly to protect it from creditors and taxes e.g. trust. If either of you are highly compensated specialists e.g. physician, concert pianist, make sure to get own occupation disability insurance.
Advanced Health Care Directives
Durable Power of Attorney - to manage affairs if incompetent. Name multiple successor agents.
Letter of Instruction - for the guardians so they know how you wish your children to be raised

It's too early to baby proof the house, but once she become mobile it will become important.

Protect your assets. Make sure to have adequate homeowner's/auto insurance including umbrella policy. Just in case the nanny has an accident at home.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
Nearly A Moose
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Re: Newborn- essential financial steps

Post by Nearly A Moose »

uberdoc wrote: Sat Apr 21, 2018 8:00 am Thanks for your replies. A separate fund for unexpected expenses is a good idea. She can only model for some anti wet burp products at this time anyway. My spouse has life insurance and I am in process of getting mine.
Beyond finances, any other suggestions such as getting a passport done etc?
If you think you might travel internationally at some point, it's worth doing it so you don't forget later. Also, baby passports are equal parts ridiculous and cute!
Pardon typos, I'm probably using my fat thumbs on a tiny phone.
Nearly A Moose
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Re: Newborn- essential financial steps

Post by Nearly A Moose »

uberdoc wrote: Sat Apr 21, 2018 8:00 am Thanks for your replies. A separate fund for unexpected expenses is a good idea. She can only model for some anti wet burp products at this time anyway. My spouse has life insurance and I am in process of getting mine.
Beyond finances, any other suggestions such as getting a passport done etc?
We made both our kids gmail accounts. I'm sure by time they're old enough to use email, we'll just messages beamed directly into neural implants, but if that doesn't happen, they won't have to be LittleMoose123. We occasionally email things to their accounts - we thought this would make for a fun modern scrapbook, but we do it inconsistently enough that it's probably just junking up their inboxes.

Not to sound all sappy, but I'd consider an old fashioned baby book of sorts - where you record all the "firsts," put their first lock of hair, etc. We laughed at the idea, but now everything is such a blur that we really just don't remember half the stuff that happened.

I also used my kid as an excuse to upgrade to reasonably nice DSLR camera. I like to take photographs anyway, and even with all the magic the iPhone can do now with photos, I still think there's something about being able to create a good photo by actually changing the aperture and shutter speed yourself, rather than having the magic computer do it all for you. I have some very nice pictures of the kids now (I also bought a quick-release clip, so I can clip it to the messenger bag that I use for the kids' stuff when we're traveling for easy access). The professional photographers are fine, but I generally find them more cost and hassle than they're worth.

Scotchguard any rugs, carpets, furniture, etc., that you want to have even a remote chance of enjoying post-baby-years.
Pardon typos, I'm probably using my fat thumbs on a tiny phone.
sksbog
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Re: Newborn- essential financial steps

Post by sksbog »

In addition to 529, you can buy series I bonds. You should be able to spend tax free earning on education or medical expenses, after 5 or so years.

Target is having new baby sale till May 3rd I think.
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