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6 Financial Tips for New Parents

6 Financial Tips for New Parents

by | Aug 22, 2024 | Family Finances

6 Financial Tips for Soon to Be Parents

Family Finances

Group of friends taking a selfie

Nursery? Check.

Car seat? Check.

Lots of cute clothes and tiny socks? Check.

How about an updated financial plan?

It’s definitely not the most exciting part about having a baby, but being financially prepared is important. While the choice to expand your family shouldn't be reduced to merely a financial decision, money can't be disregarded completely. 

Here are six tips for soon-to-be parents:

1. Begin Budgeting for a Baby

You may or may not already have a monthly budget, but without a doubt, your everyday expenses are going to look very different with a new baby. Be sure to consider the costs of things like:

  • Food or formula
  • Medical care, including the possibility of higher insurance premiums
  • Diapers and wipes
  • Clothing, toys, blankets, and other supplies
  • Childcare

If you’re new to budgeting, there are plenty of websites and mobile apps that can help you track your monthly expenses. Factoring these new costs into your spending plan can help you spend less time worrying about money and more time focusing on your little one.

2. Ramp Up Your Emergency Fund

If you don’t have an emergency fund yet, now is the time to start one. The purpose of an emergency fund is to provide a financial cushion in the event of something unexpected, like costly home repairs or an illness or disability that leaves you unable to work for a period of time. As a parent, you may also need to take off work if your child becomes sick or needs to go to a medical appointment. An emergency fund can help you make up for any lost wages until you are able to return to work.

As a rule of thumb, you should save up enough to cover 3-6 months’ worth of expenses. Start small by setting more manageable goals for yourself, such as saving $1,000 for each member of your household, and you’ll be there in no time.

3. Prioritize Retirement Savings

If you have to choose between saving for your child's college and saving for retirement, choose retirement. Your child will likely have more than one option to pay for college - including scholarships, loans, work-study programs, and grants - but you can't make up lost retirement savings. 

4. Adjust Your HSA Contributions

HSAs, or health savings accounts, are often an underappreciated pre-tax benefit that can be used to pay for a variety of current or future healthcare expenses for you and your family. The best part, any money you contribute and don't use in a given year will roll over to the next year. The money in your HSA account can be used for a wide variety of health-related products and treatments, including doctor's fees, breast pumps, and even baby sunscreen!

5. Consider Participating in a Dependent Care FSA

Similar to an HSA, a dependent care FSA is a pre-tax account you contribute to that's sponsored by an employer. The maximum contribution in 2024 to a dependent care FSA is $5,000 for families. Because these accounts are funded with pre-tax dollars, using them can lower the cost of eligible child care expenses and helps lower your total taxable income. Unlike HSAs, dependent care FSAs do not carry over to the next year, so whatever you don't use, you lose. Because of this, be sure to carefully budget for the amount of child care expenses you actually have.

6. Update Your Insurance and Estate Plan

Adding a baby to your health insurance is essential, but you may want to consider other types of insurance as well. Life insurance can help protect your family by ensuring that your loved ones will be financially secure in the event that you or your partner passes away. Disability insurance (which is often offered as a part of employee benefit packages) can also provide security in the event that one or more of the adults in your household is unable to work for a period of time. Talk to your HR representative at work or consult a licensed insurance agent to find out what options are available to you. 

Now is also a good time to either create a will or update your existing one. In addition to stating how your financial assets are to be distributed, a will can also include provisions for who will serve as guardian for your child if you and/or your partner pass away or become incapacitated. A licensed attorney can help you to create a plan that meets your needs. 

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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How to Build an Emergency Fund

How to Build an Emergency Fund

by | Aug 13, 2024 | Family Finances

How to Build an Emergency Fund

FAMILY FINANCES

blue water - red and white life saver floating in water

We all know that the unexpected can happen at any time. But when it involves expenses you did not anticipate, are you prepared?

In a 2024 report by the Federal Reserve, 37 percent of adults would not have been able to cover a $400 emergency expense without having to borrow or sell something. Having an emergency fund can help you get through these moments without any long-term consequences, as well as help you maintain financial wellness. Here's how to build an emergency fund and when you should use it.

What is an Emergency Fund?

An emergency fund, or "rainy day fund", is money you set aside for unexpected life events such as a medical bill, a loss of income, home or car repairs, and other needs. The rule of thumb is your emergency fund should cover your basic expenses for three to six months. These funds should not be used as discretionary spending and should be set aside in a savings account.

In general, emergency savings can be used for large or small unplanned bills that are not part of your normal monthly expenses and spending. These extra funds provide peace of mind because you know you'll be able to handle an unplanned job loss or bill if you ever need to. Without one, you could face financial set backs, that turn into debt - potentially having a lasting impact. 

How to Start an Emergency Fund

1. Determine how much money you'll need.

The amount you need to have in an emergency fund depends on your situation. If you haven't yet, create a monthly budget that shows all of your income and expenses. This will show you how much money you'll need each month to stay financially stable should an emergency happen. Then, multiply that monthly number by three to six months - this number is your money savings goal.

2. Identify how you want to build it.

Building a savings of any size is easier when you're able to consistently put money away. If you're not in a regular practice of saving, here are some healthy saving habits:

  • Set a goal. Once you've determined how much money you'll need, set up goals. This can help you stay motivated. Use our financial calculator to calculate how much money you should save each month to reach your goal. 
  • Create a system for making consistent contributions. There are many different ways to save, but setting up reoccurring transfers or direct deposits is often one of the easiest methods. It may also be that you put aside a specific amount of cash every day, week, or month. Aim to make it a specific amount. 
  • Regularly monitor your progress. It's important to regularly check your savings. Whether it's an email or text notification or a monthly statement, watching your progress can offer gratification and encouragement to keep going. 
  • Celebrate. If you've hit your first goal, don't miss the chance to celebrate what you've accomplished. But most importantly, don't forget to set your next goal.
birthday party-opening card

It's also important to remember that when the opportunity presents itself, you should take advantage of one-time opportunities to save. There may be certain times of the year - holidays, tax season, bonuses, and more - where you get an influx of money. While it's tempting to spend it, adding a portion of that money to your savings can help you quickly set up your emergency fund.

Where should I keep it?

Where you keep your emergency fund is up to you. You want it to be safe, accessible, and in a place you're not tempted to spend it for non-emergencies. Here are a few options, you can choose the one that makes the most sense for you:

  • Bank account — If you have an account with a bank, this is generally considered the safest places to keep your money. It might make sense to have a dedicated account where you can keep and monitor your funds. JVB has a variety of Savings and Money Market Accounts to choose from and are happy to help you figure out which account is right for you. 
  • Prepaid Card — A prepaid card is a card you can load money onto that is not connected to a bank. You can only add and spend the amount that's on your card.
  • Cash — The third option is keeping cash on hand for emergencies. But remember, cash can be lost, stolen, destroyed or easily spent on non-emergencies.

When should you use your emergency funds?

Before using your emergency fund, review your financial need to ensure you are making the right decision. Is the item essential? Is it urgent? Or, can you go without it for now? Not every unexpected expense is a dire emergency, but try to err on the side of caution. Having an emergency fund can help you avoid relying on other forms of credit or loans that can quickly turn into debt. 

However, don't be afraid to use your savings if you need it. If you spend it, just work on building it back up.

Start Saving Today!

A great way to start your emergency fund is with a JVB Money Market Account. This account allows you to earn interest on any amount. Another option is a JVB idLock checking account, which gives you the added benefits of writing checks, pay bills, and the use of a Visa®  Debit Card to pay for emergency expenses.

The content provided in this blog is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by JVB. JVB does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. JVB does not warrant any advice provided by third parties. JVB does not guarantee the accuracy or completeness of the information provided by third parties. JVB recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.

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