Having a Baby

Adding to your family means many things - including thinking seriously about the future. Every stage of your child's life brings new financial challenges. Are you ready to meet them?

Congratulations. You've made it through labor, agreed on a name, brought home your new baby to your completely finished nursery, stocked all of your supplies, and even lined up help for the next few weeks. So now you're all finished with the planning, and you can just enjoy watching your baby grow up.

It would be so nice if it were that easy.

The thing is, adding to your family means thinking hard about the future. Every stage of your child's life brings new challenges, and many of them are financial.

What you should be thinking about with regard to your little ones:

If our child is in daycare, or you're going to employ a nanny, you can take advantage of the annual amount (up to $5,000) you can deduct pre-tax through your employer. Ask your employer for more details about dependent care benefits.

Unfortunately there is no such program if you're self-employed. But there is a credit to take on your income tax return for a portion of the dependent care expenses you incur. Calculate the credit on Form 2441 (Child and Dependent Care Expenses). Be sure you are using a qualified daycare (a business with a federal identification number) or a legal nanny (and you are filing the correct payroll paperwork). Not only is this the law, if you use someone illegally, you do not qualify for any income tax deductions or credits. And that could become a very expensive ordeal if you ever run into employment complications or liability arises.

It's never pleasant thinking about "what if" scenarios, but you need to protect your family in case something does happen to you or your spouse/partner.

Will you be sending your child to private school right away? How do you plan to save enough for college? Will you provide for a public or a private university? Will you be able to cover all college expenses or just tuition? We can help you with the answers to these and many other questions about your child's education—hopefully, before you have to face them. Bottom line? You need to start saving right now to meet your goals.

Commonly asked questions

Complete a will and/or living trust as appropriate. Designate a guardian should you be unable to care for your child. Consider powers of attorney for health and financial matters. Talk to an estate-planning attorney about the preparation of these documents.

Commonly asked questions

Especially in the early years, you'll be making lots of visits to the doctor (and possibly even a few to the emergency room). Make sure you're taking advantage of any pre-tax medical accounts through your employer. Talk to your employer about which plans are available and what limits the employer has imposed on contributions into one of these pre-tax medical savings plans. You may not need the maximum dollar allotment, but you can estimate what your basic needs will be and go from there. Make sure you're taking advantage of all of your employer benefits.