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Aug 31, 2021
Personal Finance

7 Financial Planning Tips for a Baby

Becoming a new parent can be daunting for lots of reasons. With daycare and clothing costs, preschool, saving for vacations, college, and even a potential wedding, the financial costs of growing a family is no joke. Thinking through and taking some of these precautions early can help give you peace of mind, allowing more time and energy to focus on your family.


Atmos is here to help take you through some of the important steps. Atmos offers commonly used banking products for individuals and families with a twist. All of the deposits held in your Atmos accounts are used to build a clean economy where future generations can thrive. Coming soon are joint accounts for spouses, partners and kids.


1. Financial Planning with an Emergency Fund

With an extra person or two added to your household, planning for the unexpected has become more important than ever. You never know what the future will bring, and you won’t want to be caught unprepared if something unforeseeable happens. 


Building an emergency fund is a great way to safeguard against the unexpected. Experts suggest that keeping anywhere between 3 to 6 months of living expenses in a savings account is a good rule of thumb for individuals. For those with growing families, we suggest growing that account to a minimum of 6 months. 


These funds can be used for unexpected medical expenses or to make ends meet for your family when you need to make a change at your job. 


It’s okay if you haven’t started yet. Many new parents find themselves in this same position, and it’s never too late to begin adding to a rainy day fund. 


Every little bit matters, so make sure you take into account all of your expenses. Track your spending for a few months or download your debit and credit card expenses to figure out a normalized monthly spend. You want a realistic picture of what it’s like to live comfortably from month to month and use that number as a reference. Include your rent/mortgage, insurance, utilities, car and transportation expenses, food and leisure. Take into account how old your child is and what activities and types of food they are eating. Multiple that by six to calculate your savings account goal. 

Using a debit card with round-up capabilities to an emergency fund might be an effective way to build this account balance up over time.

2. High-Interest Savings versus 529 Plans

Becoming a new parent can be daunting for lots of reasons. With daycare and clothing costs, preschool, saving for vacations, college, and even a potential wedding, the financial costs of growing a family is no joke. Thinking through and taking some of these precautions early can help give you peace of mind, allowing more time and energy to focus on your family.


Atmos is here to help take you through some of the important steps. Atmos offers commonly used banking products for individuals and families with a twist. All of the deposits held in your Atmos accounts are used to build a clean economy where future generations can thrive.  

3. High-Interest Savings Accounts for New Parents


While FDIC-insured savings accounts do not have the same return potential as investment accounts, with no risk of loss you’ll know the money is always there, which is exactly what you want in an emergency fund.  


It’s important to keep your emergency funds in a separate account, even if you have multiple savings accounts, so that you don’t accidentally dip into these funds for non-emergencies. 


There are many high-interest online savings accounts offered by different banking providers and you’ll want to review your options so you pick the right one with the right features. 


Online banking providers like Atmos offer nationally leading rates with no monthly fees or minimums, and you can open multiple accounts in just a few seconds to help budget for emergencies or other life goals. Contrary to other banks, your deposits in Atmos are also used to reverse global warming so that your children and their children also have a chance to thrive. 


4. Insurance Plans


Don’t skimp on insurance plans. Add your child immediately to your insurance coverage and consider buying life insurance through responsible full-coverage providers like Bluestone. The addition of your bundle of joy to your family will prompt much more considerations for the what-ifs in life. 


Think about disability insurance as well. Many people forget about the possibility of incurring injuries that can put them out of work for months. Such insurance plans can create a safety net and provide some peace of mind just in case these unfortunate circumstances do come true. 


Sometimes adding your child or spouse to your insurance coverage isn’t enough. You must also make sure that the plan offers enough coverage for all members of your family. 


5. Look Into New Parent Tax Breaks


The government can offer certain tax breaks for new parents. It’s essential for you to understand these benefits and take full advantage of them. How much you get will depend on your income and marital status among other factors, but the amount can range from 20% to 35% of your child-caring expenses.


Your employer may also provide an FSA account that helps you allocate some of your money for childcare services. If you’re not sure whether your company offers an FSA account, you can inquire with your human resources representative.

6. Financial Planning with Estate Documents


You have just welcomed a new life into your family, so we understand thinking about the inevitable death that awaits us all is the last thing you want to consider. However, you are a parent now, and that means thinking through some of these uncomfortable things. 


In your will or trust, you should outline who is to take care of your child and serve as the guardian in your absence. You should also take the chance to assign beneficiaries of your insurance plans and allocation of your assets. Doing this proactively will ensure your estate isn’t dragged through a lengthy and expensive tax process known as probate.

Creating a will or trust doesn’t have to be an expensive process. There are many online tools that can help!


7. Cash back when you shop


Many parents quickly get caught off guard by the amount it costs to clothe their kids. Toys that engage with newborns to promote their healthy mental and physical development can also start to add up. It’s natural to want our little ones to have everything they might need, so you may want to look for cash back programs on your kiddo-related spending. Atmos offers cash back on your spending at many leading brands of sustainable and healthy clothing, food and toys for kids. 


Shopping for used clothing and toys is also a great way to keep costs lower during the early years when many items have a limited lifespan. Local or online consignment stores provide lightly-used essentials at deep discounts. Even better, see if any friends or neighbors have old gear for tots! You may be surprised what they have stored away. 


Conclusion


Welcoming a new baby is one of the most joyous occasions in many people’s lifetimes. Growing your family brings a new degree of responsibility too, and appropriate financial planning can bring you peace of mind for all that life might throw at you. Understanding the perks afforded to you via tax breaks, high-interest savings accounts, and clearly outlined estate documents are some of the steps that new parents should take. 


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