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Financial Planning

Financial Planning for New Parents

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Gaining Financial Confidence with New Parenthood

Welcoming a new member into your family is an exhilarating journey, filled with joy and new challenges. Among these challenges, financial planning stands as a critical aspect that can shape your family’s future. As new parents, it’s crucial to prepare for the unexpected while securing a stable financial foundation for your growing family. In this guide, we provide essential tips for financial planning that are tailored for the modern parent. From assessing your financial health to leveraging technology for budgeting, each tip is designed to equip you with the tools necessary for a financially secure and stress-free parenting experience. Join us as we explore practical, up-to-date strategies to ensure that your family’s financial future is as bright and promising as your new arrival.

Begin With Assessing and Strengthening Your Financial Health

  • Understand Your Current Financial Standing: Your journey toward financial stability begins with a clear understanding of where you stand today. Start by calculating your net worth – the sum of all your assets minus your liabilities. Today, this calculation is more accessible than ever with digital tools and apps that can track your assets and debts in real time. Remember, your assets include not just your house and car, but also any savings, investments, and increasingly important, digital assets like online investment portfolios.
  • Modern Debt Management: Managing and reducing debt is a crucial step in improving your financial health. Familiarize yourself with contemporary debt management strategies, such as the debt snowball or avalanche methods, which focus on efficiently paying off debts. Consider consolidation options or low-interest balance transfers if they align with your financial goals. These methods can be particularly effective for common parental debts like mortgages or student loans.
  • Embrace Digital Tools for Financial Health Assessment: In today’s digital age, a plethora of apps and online tools are at your disposal for tracking and managing your finances. Utilize these resources to continuously monitor your financial health, set goals, and track your progress. These tools can offer insights into your spending patterns, help you identify areas for improvement, and keep you on track toward your financial goals.

Developing a Dynamic Family Budget

  • Embracing a New Budgeting Reality: The arrival of a child marks a significant shift in your financial landscape. Begin by reassessing your income and expenses in light of your new family member. This includes accounting for the added costs of baby essentials like diapers, formula, and childcare, as well as potential decreases in other areas, such as dining out or entertainment. Utilizing budgeting apps can make this task more manageable, offering real-time insights and customizable budget categories.
  • Balancing Childcare and Income: For many families, childcare is one of the largest new expenses. It’s important to weigh the costs of childcare against potential income changes if one parent chooses to stay home. With the rise of remote work and the gig economy, there are more opportunities than ever to create a balanced approach to income and childcare. Crafting a budget that reflects these changes is crucial in maintaining financial stability.
  • Preparing for Fluctuating Expenses: Children’s needs change rapidly, and so will your expenses. A flexible budget that can adapt to these changes is essential. Allocate a portion of your budget for unexpected costs, and revisit your budget regularly to adjust for developmental stages, such as transitioning from baby food to solid foods or from nanny care to preschool.

Enhancing Emergency Preparedness

  • Building a Robust Emergency Fund: The importance of an emergency fund can’t be overstated, especially for new parents. Aim to save at least six months’ worth of living expenses in an account accessible for emergencies. With modern banking options like high-yield savings accounts or money market accounts, your emergency fund can grow more effectively.
  • Essential Documents for Family Protection: In addition to financial savings, ensuring your family’s security involves having key documents in place. This includes an updated will, which is crucial for outlining the care of your children and the management of your assets in the event of your untimely passing. Additionally, consider setting up trusts or guardianship arrangements to further safeguard your children’s future.
  • Insurance as a Safety Net: In today’s world, the right insurance coverage is more important than ever. Health insurance, including policies that cover telemedicine, and life insurance is essential to protect your family from unforeseen medical expenses or loss of income. Regularly review and update your coverage to ensure it meets your family’s evolving needs.

Securing You and Your Child’s Future

  • Planning for Your Child’s Education: As a parent, planning for your child’s education is likely a top priority. Begin by estimating the potential costs of their education and explore saving options like 529 plans and Coverdell Education Savings Accounts. These plans offer tax advantages and can be a smart way to save for future educational expenses. Remember, it’s never too late to start saving, but the earlier you begin, the more you can accumulate through compound interest.
  • Balancing Retirement and Education Savings: While your child’s education is important, don’t overlook your retirement savings. Prioritize contributing to your retirement accounts, such as IRAs or employer-sponsored 401(k)s. It’s crucial to remember that while there are loans and scholarships available for education, the same doesn’t hold true for retirement. A balanced approach to saving for both needs is key.
  • Utilizing Online Resources: Make use of online resources to search for scholarships and understand financial aid options for your child’s education. Websites and apps can provide valuable information and tools to plan for college costs, including calculators to estimate future expenses.

Incorporating Sustainable Financial Habits

  • Adopting Sustainable Spending Practices: Incorporate sustainable and responsible spending into your financial habits. This not only helps in saving money but also contributes to a healthier planet for your child’s future. Consider purchasing second-hand baby gear, choosing eco-friendly products, and minimizing waste. These practices can lead to significant savings and a smaller environmental footprint.
  • Environmental and Economic Sustainability in Parenting: Parenting offers unique opportunities to teach and practice environmental responsibility. From using cloth diapers to buying locally-produced baby food, there are numerous ways to make eco-friendly choices that also benefit your finances. Such practices often lead to long-term savings and instill valuable lessons in sustainability for your children.
  • Teaching Financial Responsibility to Your Children: As your child grows, involve them in age-appropriate financial decisions. This could include saving for a desired toy, understanding the cost of items, or even basic budgeting. Early financial education is a crucial step in raising financially savvy adults.

Leveraging Financial Technology for Parenting

  • Embracing FinTech for Efficient Money Management: The digital age has brought a plethora of financial technology (FinTech) tools that can simplify money management for parents. Apps for budgeting, saving, and investing can provide real-time insights and automate many aspects of financial planning. Utilize these tools to track expenses, set savings goals, and even start investing with small amounts.
  • Simplifying Parental Responsibilities with Digital Tools: Beyond budgeting and saving, FinTech can also assist in other aspects of parenting. From setting up college savings plans online to using apps that track your child’s developmental milestones and expenses, technology can be a valuable ally in managing the complexities of parenting.
  • Staying Informed and Adapting to New Financial Tools: As financial technology evolves, staying informed about the latest tools and their capabilities is key. Subscribe to financial newsletters, follow relevant blogs, and participate in online forums to keep up with new developments that can aid your family’s financial planning.

Fostering Financial Security in Parenthood

Parenthood is an incredible journey, filled with moments of joy, challenge, and growth. As you navigate this journey, remember that effective financial planning is a continuous process that adapts to your family’s changing needs. By assessing your financial health, developing a dynamic budget, preparing for emergencies, planning for the future, adopting sustainable habits, and leveraging the power of technology, you can create a stable and secure financial foundation for your family. Remember, financial stability is not just about numbers; it’s about the peace of mind and the freedom it brings, allowing you to fully embrace and enjoy every precious moment of parenting. We encourage you to stay proactive, informed, and engaged in your financial journey and hope that the tips shared in this article will be valuable stepping stones in your path to financial wellness.

About the Author

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Rick Munster

Rick Munster is a personal finance expert and author with over 21 years of experience in the credit counseling industry. He currently serves on the board of directors for the Financial Counseling Association of America and has written over 200 articles on personal finance. Rick's expertise has been recognized by several prominent online organizations, which have quoted him on issues related to credit counseling, debt management, and financial education. With more than 20 years of experience at Money Fit, a non-profit credit counseling organization, Rick has established himself as a trusted authority in the field of personal finance.
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6213 N. Cloverdale Rd, Suite 130, Boise, ID 83713
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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
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  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
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  • Property Management Companies
  • Public Housing Authorities
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Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Close

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).