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Monday, July 14th, 2014


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Budgeting for Baby

 Consider the following advice to help you prepare for your new baby, protect your growing family and ensure your financial security.

1. Invest in life insurance. Life insurance is the foundation of any financial plan and much more affordable than you might think. You’ll also get better rates when you’re young. Talk to your life insurance company about what amount will give your family the best protection.

2. Start planning for college in the delivery room. Financial aid and part-time jobs may help your child pay for college, and if you want to contribute, experts suggest 529 college savings plans and Coverdell educational savings accounts.

Saving for retirement should take priority over saving for your child’s college tuition. Student loans and part-time jobs abound for the college crowd, but loans generally are not used for retirement.

3. Update your will and appoint a guardian. Name a contingent guardian and update your will in case the primary guardian’s status changes. Otherwise, a judge might have to appoint someone you’ve never met to raise your kids.

4. Take advantage of tax savings. The IRS allows an exemption for every new dependent and also grants child credits currently worth $1,000 per child younger than age 17. And parents who have to work and pay for day care can take advantage of a child-care credit.

5. First-time parents? Prepare your baby budget now. Long before the due date, examine how your baby will affect everyday expenses. Stroll through baby stores, take notes, then redo your annual budget to include the new line items. This exercise can help you figure out if you need to cut spending in other areas.

6. Experiment living on one income. If one parent is thinking of leaving the workplace to care for the baby at home, experiment with living on one income, well before the baby arrives, to see how feasible it is.

7. Say bye-bye to brand names. Your baby won’t know the difference between top-of-the-line baby blankets and less expensive, quality ones that feel just as snuggly. Hand-me-downs, consignment shops, garage sales, and even eBay are great sources for gently used, quality children’s clothes at bargain prices.

8. Think twice before buying a new home. A new home for your growing family sounds tempting, but you may find yourself baby-rich and house-poor. Not moving at all might be better, at least for a while.

9. Accept baby-sitting offers. The best financial assistance relatives and friends can give is volunteering to baby-sit. If they offer, graciously accept.

10. Use a flexible spending account for day care. If your employer offers a flexible spending account, you may be able to use it to pay for up to $5,000 in child-care expenses a year using money exempt from income taxes.

USAA provides insurance, banking, investment and retirement products and services to 7.3 million members of the U.S. military and their families. Known for its legendary commitment to its members, USAA is consistently recognized for outstanding service, employee well-being and financial strength. USAA membership is open to all who are serving or have honorably served our nation in the U.S. military – and their families. For more information about USAA, or to learn more about membership, visit usaa.com.

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