5 Things You Should Know about Taxes and Your New Baby
Congratulations on your new arrival! Your new baby is entering a world filled with opportunities and wonder, but also with complex money issues and expenses that can be overwhelming. Here are five things you need to know!
Get Started Early
Time for a reality check: If your new baby doesn’t eat much or cause any major damage to your house or car in his teen years, the US Department of Agriculture (USDA) says you will spend approximately $140,000 to $280,000 on him by the time he turns 17. And then there is college. (You can find your state’s current college finance rates at BankRate.com. These statistics are kept up-to-date and culled annually from the USDA’s yearly report.)
In many ways, then, your child is the most important investment you’ll ever make. The degree to which you embrace the fiscal realities of nurturing a new life into adulthood is the degree to which you will survive the process emotionally and financially intact. Whether or not you let your kid host a party or drive your car is, of course, up to you.
Your joyous arrival is bringing more than just sleepless nights and doting grandparents. Your new baby enters a world filled with complex money issues and expenses that can be overwhelming. Here’s what every new parent should know about the money challenges and opportunities presented by a new arrival.
Given all the financial realities, it makes sense to think about money as soon as you make the decision to have a child. Many people set up a baby fund as soon as they know they are expecting (or are trying to become pregnant) so that they can slowly sock money away for the extra costs that will be associated with your new child’s early life.
Set up a money market account and begin depositing money every month. Think short and medium term—the expenses you will have to deal with before a child gets into school full time are varied and relentless. Working moms, be sure to check on your maternity leave benefits long before you actually have the baby—most plans will pay you 60 to 70 percent of your pay while you are gone. You’ll need to budget for that reality.
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