Last week I had the pleasure of doing an interview with Shaun from Smart Family Finance on financial changes for new parents to consider. Shaun gave me some great questions that I talked over with my husband. If you have a few minutes, please check the interview out.
I also include some highlights and new tips to help parents out with taxes.
Adjusting our Finances and Taxes with Children
During the interview I shared a few tips on how we can prepare our finances and taxes when we have children. They included:
- Amend your health insurance: The first two years includes many doctor visits. Make sure you fill out the paperwork to get your child added to your health insurance plan. That also means making sure you get the paperwork done for your baby to get a Social Security number.
- Look at signing up or adjusting your Flexible Spending Account: You may be able to lower your taxable income and take care of your new medical expenses by using a Flexible Spending Account through your job. Check with Human Resources to sign up for one if you haven’t already.
- Take advantage of tax credits, exemptions and deductions: There are several tax benefits that you can use when filing your return. You can deduct $3,700 as an exemption if you had a child last year. Don’t forget to look into child tax credit, child care credit, and saving for college.
- Adjust withholding at work: Check with Human Resources and see how you can properly adjust your withholdings for your paychecks this year.
Thinking about it a bit more this week, I’d also add the following tips:
- Prepare a baby fund: As much as you can research and estimate what having a baby costs, you won’t know how much exactly until they arrive. As soon as you find out you’re having a baby, or when the two of you decide to start trying, go ahead and start saving in baby fund. You don’t have to keep it separate from your family savings – you can just build up your financial cushion.
- Ask for gift cards in your registry: Babies are little bundles of joy and they each have their own personalities. Don’t just assume that because most babies love their swing or their exosaucer, that yours will. Check the option to add gift cards with your registry so you can get baby gear that you need as it comes up.
If you want more information and tax tips, TurboTax has a great blog where I contribute along with their own team of tax experts.
Finances, Taxes, and New Parents
I know many of you had children recently and you’ve gone through a similar process with your family’s budget. I’d like to get your thoughts on it. How many of you are first time parents? What financial changes did you make for your little one?
For those more experienced parents, what adjustments have you made over the years? Does having more than one child significantly change things (financially) or they a smaller adjustment?