Congrats on your growing family! As a new mom, I know firsthand that all this change has been a doozie. As if the punishing lack of sleep, eardrum-splitting newborn shrieks, and endless Ubbi pail emptying weren’t enough, a post-pandemic cloud of health and financial instability still hovers over us new moms. So, buckle up for some straight talk about how financial life is going to change for us COVID-era moms and our babies.
Already, we’ve had to mask ourselves to bring our bundles of joy home from the hospital and patiently wait for a child vaccine. We’ve witnessed how the global financial and health crises can affect the lives of parents and kids alike. As moms, the fundamental questions of how to prepare financially for our children’s futures are more important than ever to plan for in the wake of the COVID-19 pandemic.
Can I keep working?
Like many moms, I sobbed the morning I dropped off my two-month-old at daycare for the first time. But I consider myself very fortunate to have the choice of quality daycare. Not every new mother does.
If the pandemic has affected your family income, your short- and long-term financial plans have certainly taken a hit. Even if your job is safe today, the pandemic has shown how unexpected tomorrows can wipe out single- or dual-earner incomes. Being financially prepared for uncertainty is even more crucial once you have a tiny human depending on your for diapers, formula and onesies.
How will I pay for my baby’s education?
Whether parenthood is brand new, or you had to homeschool your little one during quarantine, the pandemic shed harsh light on our education system’s shortcomings. Perhaps it made you rethink that public school you were counting on. Or maybe the private school you were saving up couldn’t meet your child’s learning needs and you had to supplement with in-home tutoring.
Once again, you find yourself facing a new set of unknowns about what the next few years hold for your child’s education. Tuition and expenses could become a much larger portion of your family budget, in which case, having financial contingency plans in place could significantly ease that burden.
What kind of higher education should I save for?
Then, there’s college. Or is there? With the pandemic-induced shift to online learning, it’s impossible to predict what higher education will look like 20 years from now. By the time our babies graduate high school, will they even go to traditional college? Will costs have risen astronomically or dropped due to consumer outcry and shifting educational priorities?
Pre-pandemic, I wouldn’t have thought twice about opening a 529 for my child. But today, I’m debating whether it makes more sense to set up a custodial account. The key differences between these accounts are in how and when the funds can be used by your child. For 529 plans, funds can only be used for education purposes only, whereas custodial investment accounts can be spent on whatever your child wishes.
As my baby’s personality has started emerging, I can already see this headstrong child opening a startup at age 20, rather than going to college. Decisions, decisions and more decisions.
Will COVID-era babies encounter unexpected healthcare costs?
While on maternity leave, I enjoyed watching the Netflix documentary series Babies, which chronicles how infants learn and grow at an amazing rate in their first few months. It also got me thinking: What kind of long-term cognitive and developmental impacts could the pandemic have on our babies?
Many new moms couldn’t take their children out into the world to explore and learn. Our babies often haven’t even seen people’s full faces in public because of masks.
In my postpartum worrywart state, I asked the nurse about this very issue at my baby’s two-month checkup. Sure enough, pediatricians are finding that young children are experiencing much more fear and anxiety in response to what’s happening in the world around them. Not to mention, we still have no idea what the long-term ramifications of the COVID virus will be.
All this is to say, what if unexpected, potentially long-term, COVID-related healthcare issues arise for your baby five years down the road? With so many medical unknowns, are you thinking strategically about your healthcare benefits (whether through your employer or other means)? You might consider opening an HSA account if you haven’t already, and your next job decision could be determined by how comprehensive your medical benefits are rather than base salary alone.
What are my life insurance needs?
Now, for the most morbid question of all: What happens if I die? I know, I know. But the reality is that even young, relatively healthy people have lost their lives to COVID, and it’s worth finding out:
- If your significant other were to pass away unexpectedly, could you support yourself and your baby on your own and for how long?
- Is your life insurance linked to your job, and what happens if that job goes away?
Term life insurance is affordable, and the peace of mind it can bring will most likely be worth every penny you spend on it.
How to start worrying a little less
If you’re a new mom, I know quite literally how much stress you’re under right now. As my beloved and very straight-talking OB told me, from the moment our babies are born, it’s a daily grind just to keep them alive and healthy.
One of the most important gifts you can give your new baby and yourself, as a new mom, is the confidence of financial security. If you didn’t have a financial plan in place pre-parenthood, you’re still on time to get one in order. CornerCap advisors can help you assess your current financial situation and build a plan that makes sense for you and your newly expanded family.
Building financial security is a journey. CornerCap can help you get started.