Got a baby on the way?
Welcoming your bouncing bundle of joy brings new responsibilities — including an increased focus on your long-term financial goals. With the addition of mom or dad to your life’s resume, it's easy to help keep your retirement strategy on track.
Tip 1 Put yourself first
Just about everything — certainly your sleep — is a distant second to all the things you’ll do for your child. But still keep your retirement savings efforts a top priority. By saving for yourself, you're essentially putting your child first.
Your goal of financial independence not only sets a great example for your child, it also prevents him or her from having to worry about your financial well-being when he or she is grown and you’re retired.
Tip 2 Get ready for deep pockets
As you’ll quickly discover, kids are expensive — especially babies. It's estimated that the average out-of-pocket medical expenses for kids during the first year is nearly $1,300.1 It’s important to consider your budget at this time.
New parents generally spend $6,000 on baby items, such as a crib, a stroller, a car seat and clothes.2 While you don’t want sacrifice safety for cost, consider cutting costs by:
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Using hand-me-downs from family and friends. |
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Shopping consignment stores or sales. |
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Taking an experienced parent shopping with you to make sure you get only necessary items. |
Tip 3 Keep on saving
You may put your contributions to your workplace savings plan on hold when you take a parental leave. If so, consider increasing your contribution amount when you return to work — even if it’s just temporary — to make up for any savings you may have missed out on during your leave.
If you or your spouse plans to stop working to care for and raise your child, the spouse that continues working may want to consider saving more in his or her workplace plan.
Tip 4 Consider the snowball method to tackle debt
As your baby grows, you’ll find that it’s natural to compare his or her progress to other babies. Things like when he or she first begins to crawl or gets that first tooth help you to know your baby is on track.
You can also compare yourself with other savers in your peer group to see how you’re doing. Go to the retirement income tool on your account home page to see how you measure up.
1 Source: BMO Harris Bank, 2015, http://yourfinanciallife.bmoharris.com/articles/childs-first-year-medical-expenses-550132/.
2 Source: Alan Fields, co-author of Baby Bargains, http://www.parenting.com/article/the-cost-of-raising-a-baby. Empower Retirement is not responsible for, nor does it endorse, the content contained in the additional third-party material provided.
This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
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