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Becoming a parent changes everything — your priorities, your sleep schedule, and most of all, your finances. It’s hard to know where to start when you’re budgeting as a family for the first time, but don’t let that scare you away from taking the reins on your family finances. This guide offers advice on some of the biggest financial questions you’ll face as new parents.

3 Big Money Questions You’ll Face in Parenthood

How to decide if you’ll be a SAHP

One of the first financial decisions you’ll need to make is whether to send your kids to daycare or become a stay-at-home parent. Many SAHPs quit their jobs upon realizing that childcare costs rival their paychecks. Before following suit, calculate the full benefits of your job. In addition to a paycheck, leaving the workforce means losing out on 401(k) contributions, affordable health insurance, and future wage growth. While it’s the right choice for some families, it’s important to understand the full costs.

What insurance to buy

Choosing to leave the workforce isn’t the only reason your family might need to subsist on one income. Make sure you know how you’ll cover the bills if one spouse can’t work due to death or disability. For most families, that means buying insurance. A term life insurance policy is a must for all families because it protects your spouse and children if one parent passes away. If you rely on both incomes to cover the bills, consider a disability insurance policy as well.

Whether to upsize your home

Need more space for your baby? Home ownership can be a smart investment, and in many places, buying is cheaper than renting. You don’t need a huge down payment to own a home either. Loan programs like FHA loans let buyers purchase with smaller down payments and less credit history than conventional loans. However, just because you can get a loan doesn’t mean you can afford the payments. Before buying, compare your monthly rent with the full costs of homeownership, including insurance and taxes. If you already own, check comps in San Diego to compare your home’s value with the costs of a larger home. If upsizing would push your monthly mortgage budget over 30 percent of your income, it may be worth staying put until your income grows.

Financial Planning for Parents-to-Be

There’s no reason to wait until a baby is on the way to think about finances. When you’re newly married and planning a life together, these steps make sure you and your spouse are on the same page financially.

Create a shared budget

Even if one person manages the money, both spouses should have a basic understanding of your income, debt, and expenses. Getting on the same page about spending and saving now prevents financial disagreements later on.

Set retirement goals

Savings are another important piece of the puzzle. Set shared savings goals that allow both of you to retire comfortably someday. Establishing automatic transfers is an easy way to stay on track toward your savings goals.

Make a plan for getting out of debt

Unless you live in a community property state, debts you bring into a marriage remain your sole responsibility. However, since debt affects your ability to meet shared financial goals, it’s smartest to tackle debt as a team. Make a plan for paying down debt starting with high-interest debts.

Decide between joint vs. separate accounts

There’s no rule that says you have to merge accounts after getting married, but many couples find budgeting as a family is easier with joint accounts. Consider your long-term financial goals including parenthood, homeownership, and retirement when weighing the pros and cons of shared finances.

You can never truly be prepared for the dirty diapers, the sleepless nights, and the love you feel when seeing your child for the first time. However, there is one thing you can do to prepare for parenthood: Get your finances on track. Whether you’ve recently welcomed a child or are newly married and starting to plan your family, make sure these financial to-dos are at the top of your priority list.

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