'GMA' Quick Tip: How to Financially Prepare for Kids
Family financial planning can be confusing; avoid problems with Mellody's tips
Feb. 9, 2011 — -- Starting a family is fun and exciting. Figuring out your finances as a family isn't. "Good Morning America" personal finance contributor Mellody Hobson is here to help answer your questions.
Family Planning With a New Child
Bringing home a new baby is a wonderful time for families. Unfortunately, with this new addition comes the realization that your finances are probably going to change dramatically. Here are a few things to think about:
Since newborns grow so fast, their clothes don't have much of a shelf life. The really cute, really small baby outfit you saw at the store will get about the same amount of use as that really cute, really skinny pair of jeans we were all told to buy last year. Borrowing newborn clothes from friends who have recently had a child is a great way to save money.
Another important thing to consider is life insurance. If something were to happen to you, you'll want to make sure that your child and spouse will have some financial assistance. There are many different types of life insurance and they can be extremely complicated.
So make sure you sit down with an insurance agent and discuss your options; the cheapest policy may not always be the best policy. Also, look at life insurance offered by different groups that you may belong to, like professional groups, which sometimes offer insurance with good group discounts.
Also, don't forget about your health insurance. During the next open enrollment period make sure your current health insurance choice still makes sense with a new child. Keep in mind that you may need to visit the doctor a lot more often now.
Family Planning With a New Child
One last thing you should not overlook is estate planning. While this may seem like a necessity that is only for the rich, everyone has assets (e.g. property and investments) and they will need to be allocated according to your wishes should you pass away. If you have not done so already, please create a will. This will make your wishes clear.