In the Baby Bucks series, we discuss financial topics where baby and buck collide. The dollar kind, not the animal kind. Got it?
If you haven’t already heard, we had our freaking baby! I’ll probably continue to lead every post that way, because it makes my heart skip a beat every time I read it. You mean that dude who still plays with Lego’s and Brio trains and chooses Reese’s Puffs cereal for breakfast… he’s a dad?! If you say so.
So as we enter this new, crazy phase of life, a recurring theme for the next few months will be parenthood and finances. We’ve already explored a cost analysis of diapers and the cost of our nursery prior to Baby Girl’s arrival. But those are pretty superficial in the grand scheme of finances. So where’s the beef? Here’s where our financial heads will be for the next few months:
Bye bye “Individual +1” health plan. Hello “Family Plan.” In one of my sleep-deprived trances at the hospital after our baby was born, I actually already enrolled in our new, costlier plan. So for the time being, this is good as done. But I do need to figure out if there’s a way to cover the increased cost without dipping into our savings budget.
Flexible Spending Account Adjustment
To keep more taxable income out of Uncle Sam’s sight, we enrolled in an FSA in 2012. And since our use-it-or-lose-it plan’s end date isn’t until May of this year, we need to analyze our current FSA amount and decide if Baby Girl’s regular checkups necessitate an increase in our monthly contribution.
I’ve always avoided doing a whole lot of research on life insurance because it’s such a morbid concept. But with another mouth to feed, the time has come to face the dark, depressing, and costly music. Whole, universal, variable, term? How much should I supplement to the plan my employer already provides me? How else can we diversify our “life insurance” (e.g., Joanna getting more schooling, passive income sources, etc.)? I already know the answers to a lot of those questions, but I’ve still got some homework to do.
Writing a Will
If life insurance is the Keanu Reeves of morbidly depressing thoughts, then writing a will is the Nicolas Cage (read: much more depressing). In my naivete, I always assumed wills were a prerecorded video in which every last vintage baseball card and family heirloom were divvied out to family members. And while some of that is loosely based in reality, there are much more pressing motives for crafting a will, like naming a guardian for your child should anything happen to you and your wife. Pretty heavy stuff.
American Girl Doll Savings Account
Based on Joanna’s constant reminders that her childhood was ruined because she never got an American Girl doll for Christmas, it’d probably be in our best interest to start saving for one of those dumb dolls now. I’m only sorta joking about this one.
The only thing more frightening than imagining our itsy bitsy Baby Girl as a college-aged young woman (who will still wear turtlenecks all day, every day per Dad’s orders) is how much her tuition will cost. And while we haven’t yet figured out how much (if any) she’ll be expected to contribute to her own education, we’d like to start saving to cover 100% of tuition. That means it’s time to figure out all the specifics of 529 plans and the amount we’ll need to set aside for tuition plus inflation.
And Why It’s All Worth It
Most of these topics likely warrant their own posts. And as we cross each bridge, we’ll figure out if there are enough juicy details to document each process.
Is there anything else we’ve missed? How far along are you with your own familial financial planning? Or if you don’t have any children, have you already jumped the gun and started on a few of these? Are babies even worth all this stuff? (Trick question: the answer is “Yes, Johnny. No amount of stinky diapers or wake-the-neighborhood-up-at-4am-with-crying-screaming-fits will ever change that.”)