The Personal Finance Podcast - Baby Proof Your Wallet: The Ultimate Guide to Preparing Financially for A Baby

Episode Date: May 29, 2023

In this episode of the Personal Finance Podcast, we're gonna talk about how to baby proof your wallet. The ultimate guy to preparing financially for a baby. How Andrew Can Help You:  Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining  Index Fund Pro! This is Andrew’s course teaching you how to invest!  Watch The Master Money Youtube Channel!  Ask Andrew a question on Instagram or TikTok.  Learn how to get out of Debt by joining our Free Course  Leave Feedback or Episode Requests here.  Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast. Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Thanks to Ka’Chava For Sponsoring the show! Go to kachava.com/pfp and get 10% off on your first order.  Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at  shopify.com/pfp Policygenius: This is where I got my term life insurance. Policygenius is made so easy. To get your term policy go to policygenius.com and make sure your loved ones are safe. Hello Fresh: Check out Hello Fresh www.hellofresh.com/pfp50 and use promo code PFP50 for 50% off your first order and free shipping! Delete Me: Use Promo Code PFP20 for 20% off!  Links Mentioned in This Episode:  Trust and Will Connect With Andrew on Social Media:  Instagram  TikTok Twitter  Master Money Website  Master Money Youtube Channel   Free Guides:   The Stairway to Wealth: The Order of Operations for your Money  How to Negotiate Your Salary  The 75 Day Money Challenge  Get out Of Debt Fast  Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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Find your advisor at IG Private Wealth.com. On this episode of the personal finance podcast, we're going to talk about how to baby proof your wallet, the ultimate guide to preparing financially for a baby. What's up, everybody, and welcome to the personal finance podcast. I'm your host, Andrew, founder of mastermoney.com. And today on the personal finance podcast, we are going to be talking about how to prepare for a baby financially. If you guys have any questions, make sure to hit us up on Instagram or TikTok at MasterMoney. and follow us on Spotify, Apple Podcasts, or whatever podcast player you love to listen to this podcast on right now. And if you want to help out the show, leave a five-star rating and review on Apple Podcasts or Spotify. I cannot thank you guys enough for leaving those five-star ratings and reviews.

They truly do help out the show so that we can spread the message that anybody in this world can build wealth. And if you want to watch this on YouTube, check out the Anderajinkola YouTube channel where we have all of our content on YouTube. including you can watch the podcast and see some of the visuals that we're talking about as we go through some of these things that we're talking about today. So today I'm really excited to share this episode with you. This is going to be the podcast that I wish that I had before I had a newborn baby because I wanted to figure out how to prepare financially for my firstborn child. And when I did that, there was not really great resources that were out there to kind of help you. So today I'm going to give you the all comprehensive guide and all the costs that you should expect when preparing for a baby. I'm going to show you how to lower some of those costs.

With some of the hacks that are out there, there's a bunch of tips and tools that I'm going to show you to lower some of your costs from everything. We're going to go across everything from the necessities that you need, from diapers and all those types of necessities. In addition to looking at your insurance costs, how you have to set that up, and if you need to reduce hospital bills, all of these other things. So we are going to go through a ton of information on this episode. So I hope you guys are ready. If that's something you're into, let's get into it. All right, so the first thing you have to prepare for is prenatal care. So this is the before you go to the hospital, all of the care that you have beforehand.

And this is going to be very important to prepare for because this is actually a costly time that a lot of people don't think fully through. So there are going to be things like doctor visits. So when it comes to doctor visits, you have to figure out within your insurance what your co-pays are going to be. Now, you should know this from when you set up your insurance originally, but typically your co-pays are going to be anywhere from, from free all the way up to a few hundred dollars, depending on if you have a high deductible health plan. And we'll talk about how to set up your insurance and if you have that time frame to be able to adjust your insurance

before the baby comes so that you can reduce your costs in the hospital. But this is for some of the prenatal care. In addition, you have things like ultrasounds. Make sure your insurance is covering that. You have things like prenatal vitamins, genetic testing, and birthing classes. So all of these here are things that you really need to prepare for. And so you need to call each of these respective services that you utilize and make sure that you have the costs up front of what that's going to be so that you can have this prepared going forward. Now, this is very, very important because this can blind sign a lot of people, especially when it comes to testing.

Say, for example, you want to do a specific gender test. Well, some insurance companies do not cover specific tests. So if you do that, you have to make sure that you are understanding what the costs are associated with it. because if you take a test that is not covered under your insurance, it can cost you thousands and thousands of dollars. So you got to make sure up front that it is covered. And sometimes the hospitals or the doctor's offices don't even tell you if it's covered or not unless you ask.

So you have to make sure that you are asking those questions frequently. Always ask the question, even if it sounds like a dumb question, just make sure you ask if your insurance covers each of these items. Now, when you get the doctor bill, every time you go to the doctor, make sure you get an itemized doctor bill. This is very important because you want to make sure that you are being billed correctly for each and every item that you use when you went to the doctor's office.

So each time, this is important because a lot of times things are coded incorrectly. And when that happens, then you can go back and negotiate some of the items off to make sure it's all the things that were covered when you went to the doctor's office. Now, number two, this is the one that's really going to be important. Is hospital or birthing center costs? First of all, need to figure out what it's going to cost when you go to the doctor's the hospital. So there's a number of ways that you can do this. First of all, obviously, you need to know your deductible overall because you're probably going to hit that bad boy for this

year when you have your child. Whatever year you have your child. And if you're seven months away, for example, and you're waiting until the next year. So you're going to adjust your insurance. You can do that. We'll talk about that in a second. But at the same time, you've got to make sure you know what your full deductible is and you have to start saving up for that full deductible. In addition, once you decide which hospital you're going to have the baby at, what you want to do is call the hospital and say, hey, what are some costs associated with this? Here's my deductible. Here's my insurance. What do you think it's going to cost me to be at the hospital for this time frame? And then you're going to get maybe some sort of quote. And usually they're not fully

accurate. It's not going to have everything on there. But it's going to give you a great idea of exactly how much you're going to spend. Because if you have a high deductible health plan, maybe you won't spend the entire deductible. So you've got to figure out how much am I actually going to spend so I can save up that much for a cash buffer over the course of the next couple of months as we wait for our baby to develop. Now, you also want to make sure your insurance cover some of the extra stuff like ultrasounds, all those extra things that are involved. And anything else that you can think of that you may want to do in the hospital,

just make sure it's all covered. That's the key here because you don't want to get blindsided when you have your newborn baby. You don't want to be stressed or have anxiety or anything like that. You want to make sure that you understand everything going into it so that you are financially prepared. Now, number three, this is a big one for a lot of people that they really have to think through. Your emergency fund could come into play with this, but I would like to have an additional cash buffer for this when you go through this. So maternity and paternity leave.

So this is thinking through what is your loss of income going to be if it's not covered by employer-sponsored paid leave? So for example, sometimes people will have either maternity or paternity leave and it's really not covered for as long as they want to be with their newborn baby. Maybe it's only four weeks or six weeks and you want to be with your newborn baby for a total of 12 weeks, for example. Then you've got to think through how am I going to prepare for this? I'm going to give you the step-by-step guide here right now on how to prepare for that. So I want you to list out how many months you will be out of work unpaid. That's the first thing you want to do. So say, for example, you want to be out of work for four to six months.

So you're going to list out how many months you want to be out of work so that you can spend time with your baby. Then look at how much you spend every single month. If you don't have a budget already, then you need to go back with some of your bank statements for the last three months and figure out how much you spend every single month. And going forward, I want you to have a budget because once you have children, financial responsibility inside of a budget is very, very important because you're going to have a lot of additional costs coming into play. So making sure you have that budget, that budget actually creates freedom for your life instead of restriction. Most people think it's restriction. It's actually freeing for your life to have that budget in play because you're allocating those dollars where you want them to go. And if you want your children to have the best life possible, you can allocate more dollars towards that.

It's absolutely amazing what you can do once you start tracking your money. So look at how much you spend monthly. That is number two so you can figure out how much you need to save. Then what I want you to do is save enough to cover those amounts of months. So for example, if your employer will cover eight weeks but you want to be off for six months, for example, then what I want you to do is figure out how much you need to save up for those additional four months plus one month extra. Now, the reason for the one month extra is it's going to give you a cushion. And that cushion is very important because sometimes what happens is people stay.

home with their children, they realize they need another month. And sometimes what they do is they realize they need an additional month and they don't have the coverage there. And then they go into the hole because they have not saved for that cushion or that extra month. Worst case scenario, when you save up for that extra month, if you don't use it, you just roll it into the old emergency fund or you can invest those dollars if you have a fully funded emergency fund. And then obviously, if you do need to use it, then it's available for you there so that you are covered and you don't have to worry or stress. The last thing you want to do during this time is, is worry your stress about money. Instead, what I want you to do is enjoy your time with your

brand new baby so that you can reduce that stress, reduce that anxiety. So making sure you have that extra month in play is something that I think is really, really helpful for a lot of people. Now, number four is we're going to talk about baby essentials here. So these are things like crib mattresses, bedding, changing table, seat stroller, baby carrier, high chair, diaper, diaper bag, and baby monitor. All of these things can really add up as you start to prepare for some of this stuff. So obviously if you have a baby shower, a lot of of this stuff can be covered inside of that baby shower if somebody throws you a baby shower and you're privileged enough to have one. If you're not privileged enough to have one, then what's

going to happen here is there's a number of different things I'm going to list here that will really help you save money on some of this stuff so that you can really maximize your budget and keeps as many dollars as possible for the things that truly matter to you. So obviously, before we dive into any of these, you want the safest and best you can possibly afford because your newborn baby is much more important than just saving a couple bucks on some of this stuff. But number one is you can borrow from a friend or a family member. So there are a lot of friends and family members that we had that have already had baby. So when we've had our first newborn baby, we borrowed all kinds of different things. For example, we borrowed a crib from a friend when we had our second baby because our first baby

had our original crib and we didn't have a second crib. So we borrowed one from a friend so that we could utilize that crib for our second child. This is a free way to save hundreds of dollars on a crib if you do something like that. Or you can borrow other baby items as well. We've lent out a bunch of our different baby items to friends who want to try out things because baby stuff is expensive. Once you slap baby on the product, the price goes way, way up because people are willing to spend it for their newborn baby. So you got to make sure that if people are out there in your lives, maybe it's family members or really close friends that you can borrow some of this stuff as long as you return it in the same condition, then that's a great way to save some money on some of

this stuff. Number two is you can buy secondhand, especially if it's really, really, really good condition. Furniture stuff is great for this buying secondhand. You can go to local thrift stores, or there's also secondhand stores that refurbish some of this stuff like cribs so that you can have something that's basically brand new, but for a much lower price. Number three is set price alert. So you have nine months prepare for some of these items, so you can set up a bunch of different price alerts on different websites. So honey.com or camel, camel camel for Amazon or slick deals offer price alerts that you can set up and you can get price alerts to your inbox for specific items. So you can go out into your registry and you can pick out a bunch of

different items and if you want those items, then you can put price alerts into some of these websites so that you can figure out when they're at their lowest price. Obviously, Black Friday is a great time to buy some of this stuff or Amazon Prime Day is another great time to buy some of this stuff so that you can get it at lower prices. Another great tip is to choose versatile items. So one cool thing that we did with our firstborn is we got a crib that also turned into a toddler bed once he became of age to become a toddler. So this was very important because you didn't have to buy a bunch of different pieces of furniture. All you had to do was buy one piece of furniture and make the adjustments as your child grows. This is a great way to save money on some of this stuff because you

can keep it for a much longer period of time than just the first couple of years when your child is born. You can do this with car seats as well. Car seats, if you didn't know, are very, very expensive. So you got to make sure that you have convertible car seats and convertible strollers. Strollers are one of the most expensive things on this list. Don't get me started on that rant. But strollers are really, really expensive. So you got to make sure that you have ones that will actually adjust for when they become toddler age. Now, another thing you could do is look for trade in deals. At the time of recording this, Target is doing a deal where you can trade in your old car seat, get 20% off a new car seat. Now, they don't do that year round. They only do it for

very specific timeframes throughout the year. But other companies do this also. Another thing that you can do is price match. So if you find really low prices online, for example, places like Target will actually price match for you. So if you get that price match, say for example, you find a straw that you absolutely love. It is $300 cheaper online than it is at Target. You can walk right into Target, show them that as long as that price was there within the last 14 days. And you can get that reduced price at Target. They will actually price match that. And there's a number of other stores that will do that. So it's very, very important to make sure that you are looking at different prices because if you do this across all of these items, you can be saving thousands of dollars

if you're buying all the stuff yourself. Now, if you're putting it on your registry, make sure you put as much as you possibly can on that registry, and then whatever is left over, then you can go out and buy some of that stuff so that you can get as much as you possibly can covered when it comes to your baby shower. Now, number five, let's talk about clothing, for example,

because you're going to be amazed at how much clothing you go through with a newborn baby. Now, if you have a baby shower, you're going to get a ton of clothes, and sometimes it's going to feel like it's too much. But what happens is a lot of times you get maybe a bunch of newborn sizes. for example, and sometimes your baby won't even fit in newborn sizes. So you have to trade some of those

clothing items in so that you can save money on some of this stuff. But you want to look for places that have big sales. So for example, Children's Place, which is a kids clothing store, just had a big sale. So my wife just bought five polos for our son for like 25 bucks. That's a great deal. Whereas if you buy stuff at full price, you're paying the same amount for a short set that you would for an adult. So making sure that you kind of look for some of these price fluctuations is really important in clothing. And anytime you have a sibling who has kids who are maybe a little older than yours, always accept hand-me-downs. Even if they're not hand-me-downs that you want, just go through the pile and anything you do not want, then you can go ahead and donate because

that's a great way to get additional clothing items that you would not have to pay for going forward. Sometimes you can find some diamonds in the rough when you get some of those hand-me-downs. And then if you plan on having more kids, just make sure you save the old clothes. You can put them in vacuum-sealed bags and save them in the closet or whatever else you want to do. But save those old clothes that you can save money on the next one. because a lot of times you'll realize these clothes are only worn once or twice before your baby grows out of them. And sometimes we have stuff with new tags on them still. So making sure that you save some of this stuff is going to save you a lot of money in the long run.

Now, number six is diapers and wipes. So diapers is a big one that a lot of people worry about because they are very costly, and it is a monthly recurring expense. We usually spend 75 to 100 bucks a month on diapers. So here's a couple tips to find the cheapest diapers. Number one, Costco and Sam's Club have a really good bulk pricing. on diapers. You just got to make sure that your child is not going to grow out of those diapers before you actually finish the entire pack. So just kind of thinking through if they're on the border

line, maybe you go one size up so that you don't have to waste a bunch of diapers that you already purchase. Number two, you can look for specials at places like Target. Where Target a lot of times will do things like buy two, get one free. So you just got to price it out. Is that cheaper than get buying bulk from Costco and Sam's at that time? And you can look for other coupons as well that will help you reduce that price even more. Now Groupon has a link. where they post the cheapest diapers each and every single week. I'll link it up down in the show notes below so that you can check it out. But they have a page that will show you all the major brands

and then the cheapest prices for those brands. Because what you're going to find is sometimes some babies have different reactions to different diapers and others and they may get a rash with a specific type. But with another type, they do not get that rash. You're going to have to figure out which brand works best for your baby and then figure out how to find the cheapest prices. But that's a great resource to do so because every week, they find the cheapest prices on that.

And then you can also say, 20% on diapers and baby food every time with Amazon family. So if you have an Amazon family account, you can set that up and you can save 20% every time if you're in a pinch and you just want to make that super easy. All right, number seven is feeding. And I want to talk about feeding for a second because one big thing to note is if your family decides to breastfeed, you can get the breast pump from your insurance company. Now, this is one thing that you definitely want to make sure that you do because these things are hundreds of dollars. And you can get a really nice one from the insurance company for free, which is a fantastic thing. Now, if you have to go the formula route,

with the formula route, there's a bunch of ways that you can save money on that. First of all, you can buy it in bulk at places like Costco or bulk stores, but also what you can do is you can price out and sign up for some of these loyalty programs. So if there's a formula that your baby likes, you can sign up for the newsletter and they will send you coupons constantly because they want you to use their brand. They do not want you to shy away to some of the other brands. So they are willing to give you coupons on some of their brands. Now, is an expensive route to go, but sometimes you have no other option. So just looking to combine sales and coupons and all that kind of stuff if you want to do that. Now, one thing I want to note about

coupons here is some people go crazy when it comes to coupons and baby items and all that kind of stuff. For me, you got to figure out what the cost per dollar is to do this kind of stuff. I don't really search for coupons ever unless I'm shopping online. I'll just look for a promo code really quick because I think it's a waste of time in the long run when you could be focusing on earning more money and doing some of these other things that we talk about. But if you're in a pinch and you really have to save every single dollar, then coupons are a great option if you have a lot of time. Maybe you're home for the next 12 weeks, for example, and you want to save some money, then you can go out and search for some coupons so that you can figure out the systems to maybe put together

where you can do this really, really fast. And the same kind of tips goes for things like bathing and grooming, so you'll need like a baby bathtub and towels and washcloths and baby shampoo and lotion, nail clippers, grooming kit, all that kind of stuff. That stuff doesn't really cost too too much when it comes to your newborn baby. The setup costs for maybe the baby bathtub that kind of stuff. You can put it on your shower list. If you don't have a shower, it can cost anywhere from like 50 bucks or so.

And then 20 bucks a month for other grooming items. But number nine is health and safety items. This is what can cost you a lot of money, especially if you have a child who is prone to getting sick or you are sending a child to daycare. So when we sent our first son to daycare, he was sick for 15 weeks straight. So we didn't send him until he was one years old,

but he was sick for the first 15 weeks. So our second child, we sent at the age of two. So he actually started in daycare at March. He had a nanny at home for the first two years. And he hardly ever got sick, A, because he had a brother. And B, because he was a little bit older, so he didn't get sick as much. So our firstborn, we spent a lot more money on some of those things like you have thermometers

and humidifiers and first aid kits. But there's also things that you need like medicines, for example, to lower fevers and temperatures. So children's motoring, children's Advil, those are always priced so much higher. Just for a little bottle of each one of those things, it's usually like 15, 17, bucks here in my area. So it can really add up if you have a child who is prone to getting sick where it can go anywhere from $20 to $50 a month. So you just got to make sure that you prepare for some of this stuff. The reason why I'm telling you this is because I want you to put together

every single little thing so that it's going to all add up in the end because, for example, that bathing and grooming is 20 bucks a month. And if you have 50 bucks a month for things like medicine and all these other things that will come up, in addition to doctor's visits when you have your newborn baby, all that kind of stuff. Also is baby proof. your house. So that's the upfront cost that you have to have, and it's for the health and safety of your children. There is a brand that I really like on Amazon that puts together bulk packages for babyproofing called safety first. I will link them up in the show notes below so that you can check them out. That's where I got all my stuff. You just put together, you know, stuff so your babies don't

open the cabinets when they start crawling and when they start walking around. When you have a brand newborn baby, they're not going to go anywhere. So you don't have to worry about that right away, but just making sure you budget out some of that stuff because you could end up spending about $200 just babyproofing your house. And if you have stairs or anything like that, you're that, putting together baby gates is another piece that you want to have so that you can protect your children. Or if you have a pool, putting up a pool fence is imperative. So pool fences are anywhere from $600 to $1,000 if you have somebody install it. And sometimes it's even more all the way up to $2,000 to $3,000, depending on where you live. That is imperative if you have toddlers

and you have a pool at your house. That is one of the number one causes of death of children is drowning in the pool. So you have to have that available to where you can get a pool net or any of those things, but I cannot stress that enough for any individuals who are going to have a baby and they have a pool at their house. You've got to have that baby gate, even though I know it's not aesthetically pleasing. It's not the best thing in the world, but you have to have that available if you have a pool. And then you have toys, books, all that kind of stuff. You can deem whatever you want for that kind of stuff and deem whatever you feel appropriate. For my firstborn, I went way overboard on all of his stuff. And then I kind of toned it back as time went on. Now, the big one that we're going to talk about

Next is child care. So lately, I've been noticing how fast things are changing at home. The kids are growing like crazy, clothes don't fit anymore, and routines are changing. And it just hits you. Life is expanding. And when your life grows, your responsibility grows with it. That's something I've been thinking about more this spring, making sure the safety net we have in place actually matches the life that we're building. And that's where PolicyGenius comes in. PolicyGenius is an insurance company. They're an online marketplace that helps you compare life insurance quotes from some of the top insurers in America, all in one place for free. And their licensed team works for you, not the insurance companies. So they help you find the right

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and support our show by saying you heard about Indeed on this podcast. Indeed.com slash personal finance. Terms and conditions apply. Hiring, Indeed is all you need. Let's talk groceries, specifically your groceries. With Instacart, you want your groceries just the way you like them, right? Well, the Instacard app lets you do just that. They have a new preference picker that lets you pick how ripe or unripe you want your bananas. Shoppers can see your preferences up front, helping guide their choices.

Instacard, get groceries just how you like. All right, so now we're going to get into some the nitty-gritty stuff in terms of the long-term wealth building stuff because I want you to understand some of the major costs that could be associated. In addition, some ways to build wealth for your children as you get them started here. If you haven't heard our episode,

we teach you how to make your kid a millionaire with a standard brokerage account. I will link that up down below so that you can check that out. We'll talk about that here in a second too, but that is a great one for you to listen to after this episode. because when you have a newborn baby, there's some cool stuff that you can do. Now, child care is a big one.

We have an entire episode diving into child care because it is going to be your biggest budget expense if you do not have a parent staying home full time. So if you're the mom or you're the dad and you're not staying home full time, then you're going to have child care costs associated with taking care of your children and this is a massive, massive expense.

So what you need to do is if you're going to put your child into child care as a baby, then you need to start getting on waiting list. now, A, and you need to start pricing it out now because these waiting lists are getting very long. It's very difficult to get into some of the best child care centers. So you got to make sure that you have this budget set up for child care because this is going to be your biggest cost. And we've talked through some ways to save on that episode.

So we will link that up down below. But make sure you are starting to take tours now so that you can get on those lists and you can get into the best childcare that you can possibly afford so that going forward you have the best care for your children, which is the most important thing. Now you're probably thinking through, well, what do I do about college savings? Should I start right now to build out long-term wealth? And how do I invest for my children? I want them to have the best lives that they possibly can.

Now, for college savings, we like flexible 529 accounts. We have a full episode talking about how to set those up. But flexible 529 accounts are ways for you to save for your children's college and with a ton of different tax benefits. So you contribute money in, you get a tax deduction on that money, and the money grows tax-free as long as you utilize that money for qualified education. but there's a new rule coming out next year in 2024 that's going to allow you to roll over up to $35,000 into a Roth IRA for your child if your child does not use the entire 529 account.

So really flexible stuff going on here. You can invest the money inside that 529 account. So you have 18 years for this money to compound, which we talked about in that episode is absolutely amazing how much you can save just with consistently investing into that 529 plan. Now, if you're not taking care of your retirement account first, I do not want you saving for your kids college. You need to take care of your retirement first. Then you can start saving for your kids college. There is no loan for retirement. There is loans for your children to go to college. I know that's not the best thing you want to hear. You want to do what's right for your children,

but you could end up working an additional five, six, seven, eight, nine years because you're not taking your retirement and you're contributing to a 529 plan. I want you to hear me out on this. You really need to make sure you're taking care of your retirement first. Secondly, you could also start investing for your kids if you're taking care of your retirement. So we have that episode that I was just talking about where you can build wealth in a brokerage account. And I'll give you the quick rundown of how this works so that you understand how you can actually build this generational wealth for your children. So what we do is we put $1,000 when our kids are born into a taxable brokerage account. Now, once we do this, this is very powerful money. So if you can put more money

in there, even better. And we have this money in that taxable brokerage account. The reason why I have it in a taxable brokerage account is because it's really flexible. If you put it in a UTMA or a UGMA, it is going to be less flexible than a taxable brokerage account is. Then I just put my children's names as the beneficiaries of each account. Then every single month, I contribute an extra $100 per month. You can do whatever amount that you can afford because they have so much time to compound, even $10 a month will make a massive difference in the long run. Then every birthday and every Christmas or whatever holiday you spend at the end of the year,

you add an additional $250. bucks. Sometimes this is just money that they get from parents, aunts, uncles, all that kind of stuff for their birthday. And you can say, hey, if my kids have too many toys, you can say, hey, just give him money. I'm going to put it in this brokerage account and I'm going to let it grow for them so that they can have this wealth and you can show them how this works. And or you can do it yourself. And if you do this over the course of the next 18 years, you'd have about $80,000 in that account if you got a 10% rate of return. Now, if you did not contribute another dollar into that account from 18, all the way up to age 65 and it continued with that 10% rate of return, your kids would have over $7 million

inside of that brokerage account just from you putting $100 a month every single month and an additional $500 bonus when you can. Now, you could put way less than that. Not everybody can afford to do this, but if you just put even less than that, imagine how much this money can compound over time and how you can build wealth for your children. It's a very cool way to do that. And if you do it from the day they're born, they have so much time to compound. Now, you can also open those 529 accounts, by the way, before.

they're born. So you can open them in your name and then you can transfer it over to your children. In addition, you can also do the same thing with those brokerage accounts. I have my 529 accounts and my kids brokerage accounts at Fidelity. Vanguard's another great place to do this. And Charles Schwab, I've never used their 529 plans, but I'm sure they are great there as well because they have a great brokerage over there. All right, next we're going to talk about life insurance. So what you want to do is now you have dependents who are going to be depending on your income. So if you have kids, you need life insurance. That's the number one thing that you're going to need. Now, the good news is life insurance is actually very cheap for what you actually need. And what you actually need is term

insurance, because what that does is it's the lowest cost per month. You can get term insurance for as low as $25 per month for a couple hundred thousand dollars with the coverage. And this is going to allow you to make sure that your dependents are covered. So if anything happens to you and your income, your dependents are still covered and they have money coming to them so that they can be taken care of in your absence. So that's very, very important to understand what type of life insurance. Term life insurance is what we like here. This is what I have. Do not do any cash value life insurance or whole life insurance unless you have a very specific situation where you really need that. For almost every single other circumstance, term life insurance is best for 99 plus percent of

people. So this is the lowest cost for you. And you're going to hear a bunch of other life insurance salespeople tell you otherwise. Guess what? You want to know why they want to tell you otherwise? because they make thousands of dollars and commissions off you if you buy their life insurance policy. Do not do this unless you fully understand what's going on. We've had a number of other Q&As where I've talked about why this is, but just making sure that you understand term life insurance is the best route to go. Now, policy genius is where I have mine set up. We have them also linked up in the bio always because they are a long-term partner of this

podcast. They are a sponsor of this podcast. And that's where I set mine up. It was super easy. It took me like 30 minutes and I was good to go. So really thought it was an easy. process with PolicyGenius, that's where mine is. Now, health insurance, this is a big one that I want to spend a little bit of time on because

you need to understand how to kind of set this up properly. So this is kind of the big hitters that we have on the back end of this episode. So if you are on your own plan and not a family plan, your insurance premiums are going to go way up so you need a plan for this because what you're going to have to do is you're going to have to develop a family plan so that you can get your children on your health insurance. Now, if you do this through your employer, just call up HR and say, hey, I'm expecting I need to adjust my insurance to a family plan.

They're going to either direct you to the right people or they're going to help you do that adjustment. If you have open enrollment coming up pretty soon at the time you're listening to this episode, then you can make that adjustment before the baby comes. But I would make that adjustment as soon as possible because you never know what could happen. Anything could happen. What you don't want to do is hold off for like 34 or 35 weeks and then all of a sudden you have a baby coming early and you don't have the health insurance set up properly. So you got to make sure that you do this as soon as you possibly can once you know,

that you're expecting and make that adjustment to the family plan if you don't have both parents already on a family plan. So if you and your spouse or you and your significant other are on a family plan already, then likely your children are going to be covered. But you just got to add them onto your health insurance and make sure you go through that process. Now, if you're on your own insurance coverage and you're self-employed or something like that, then just go to your insurance agent, let them know this situation and they will help you walk through some of those steps. But here's what I want you to do when it comes to insurance, is I want you to go through, review that insurance policy like we just talked about,

then I want you to contact your insurance company and think through all the specific questions you have. So coverage for prenatal care, labor and delivery, postpartum care. All three of these are really important. You want to make sure you know what's covered. And you should also ask about deductibles. You should ask about your co-payments,

your co-insurance, and your out-of-pocket maximums that apply. So write down all those things I just said. If you're driving, make sure you write down the timestamp on this or just screenshot it so that you understand. that you understand. Those are the things you need to ask them about. If you want scripts for this, message me on Instagram or shoot me an email

if you're on the Master Money newsletter and respond to my email. And we will develop some scripts for this that you can ask them the right questions. Next thing you want to do is obtain pre-authorization. So some insurance plans require that you have pre-authorization for certain procedures, including hospital stays for childbirth.

So you need to check with your insurance company when you talk through some of this stuff to get pre-authorization and make sure you do all the necessary steps when it comes to that. You can ask him that question too. Do I need to be pre-authorized for specific care when we go through this process? Next one is make sure you are choosing a hospital that is in network. The last thing you want to do is have an out-of-network hospital and you're paying for all this stuff out-of-pocket cost. Very important that you choose a hospital that is in network for your insurance

once you do that update with your insurance and then you can go through and make sure that all your birthing center are in network in addition to your insurance plan. And this will result in much lower out-of-pocket costs. You definitely want to do that. Now you want to estimate hospital costs. So you can request an estimate of hospital charges for labor and delivery. So this is going to include all the facility fees. It's going to include all the physician fees, anesthesia fees, if you need it, and other associated costs. So the one thing to keep in mind here, though, is that these estimates are not completely accurate because they do not factor in unexpected expenses if there's complications or something along those lines. So you just got to make sure that you actually

budget a little more if it's less than what your deductible is going to be. And then if the hospital costs are super high for you. If you have an insurance plan where the hospital costs are just really, really high and there's nothing else you can do about it, then you can opt into what is called a payment plan. The last thing you want to do is for this to go to collections. So just ask them to put you on a payment plan. And when you have that payment plan available for you, that will not hurt your credit. But what will hurt your credit is if you go to collections. Now, every time you get a hospital bill, I want you to get an itemized bill so that you can understand what these costs are. Because once you break these costs out, this is going to allow you to negotiate. some of these costs off. Maybe there's some things on there that you really don't think that you even had care for. You can negotiate some of this off. For example, we had a listener who just talked about this on Instagram who had a baby and there were some costs on there who had a baby and asked for an itemized list of some of her costs. And she saw some things on there that were resulting in about $2,000 that had nothing to do with her actual childbirth. And she negotiated that off and got $2,000 off of her medical bill because of that. So you really got to watch this stuff and make sure stuff

is getting billed correctly. And then once you have all this estimates in, then you can budget for these additional expenses. But it's really important to go through this process so that you understand exactly what you need to be doing in terms of asking your insurance these questions. So like I said, if you guys want some scripts on this or you want a checklist, we can put that together for you

so that you have the best possible chance of having the perfect budget for this. Now, the next thing is estate planning. Now, when it comes to estate planning, there are three options that you have available to you. Number one, you can get a lawyer, which is the highest cost way to do it. and a lawyer can draft up a will for you or if you want a trust, then you can go to a lawyer.

Number two is you can go to a website like Trust and Will. That's where I did mine. And at Trust and Will, it is a fantastic, easy place to do this. My parents just utilized trust and will, and they said it felt like it was almost too easy. So I will link up Trust and Will down below if you want to check them out. But there's also option number three, free templates online. So there are a bunch of different websites online that have free templates like Law Depot or Do Your Own Will.com.

Or state and government websites also have free templates for. will. So you just got to make sure you have a trustworthy resource because sometimes they can omit stuff that you really, really need. So just making sure you have that available to you is important. Trust and will, I think, costs like right around 150 bucks to do a will. Everybody who has kids needs a will. You absolutely have to do that and make sure you have that available. Also, if you want your kids to be beneficiaries of your brokerage accounts, say, for example, something happens to you and you want to make sure that your kids get your money. If you pass away with your checking accounts or your savings accounts or your brokerage accounts,

make sure you switch the beneficiaries to them once they are born, they have a social security number, all that kind of stuff. So making sure you have that available and you set up the proper estate plan for them so that you have all that stuff ready to go. Now, additional living expenses. You're going to have an increased grocery bill.

It's just going to happen. It's part of life. Utility costs may go up, but not really by that much. And then other household expenses. So our groceries increased about $50 per child when they're in the toddler phase like they are right now. So obviously over time, that's going to go up. I'm 6'4.

I have two boys right now. They're already way off the spectrum when it comes to height. They're probably going to eat a lot as they start to progress in life. So that's going to go way up over time. I'm planning on that going up over time. But right now, we pay about $50 per child when it comes to feeding them, but you may have much higher cost if you're using something like formula as you go through this.

So just making sure that you are factoring in that cost when it comes to additional living expenses. Now, number 17 is one that I thought. thought about omitting, but this is something that I know everybody's psychology when it comes to this. And it's the new car when the baby's coming. The majority of people who have a newborn baby all of a sudden make a switch to a new car. And let's get real here. If you want to do that, that is completely fine. Just making sure that you can afford that vehicle, we have a number of episodes talking about how much you can afford when it comes to buying a car. But I'm going to spare you the lecture here because you probably know the implications that a car is a depreciating asset.

It's not the best investment. In fact, for most people, that's, what's killing their wealth building ability is their vehicle and going into debt for car payments because putting your money into a depreciating asset is something that's very difficult. And sure, you can put your kids in your car if you want to, but you also want to have the safest vehicle available for your children. So if that's you, if you're looking to upgrade your car or you need more space for your vehicle, just making sure you're factoring in those costs. And this is why the budget is so important. Because if you just go out and buy a car and take on monthly payments based on what your expenses are right now and not what your future expenses are going to be,

boy, you can get yourself in some real trouble by doing that. So you got to have a budget in place before the baby comes and before you purchase that vehicle so that you know how much you can actually afford. Now, we talked about how much you can afford when it comes to cars, a bunch of different factors into place. So make sure you check out those episodes if you haven't heard them already

because it's really, really important to make sure that you know this stuff before you go buy that larger vehicle with the third row or the second row or that SUV or if you're going to slow ride the whip with the minivan. So maybe you're going to go cruise down the beach with both minivan sliding doors wide open. Maybe that's the route you're going to go. So if you're going to go that route also, then just making sure you know how much you can afford

because minivans are really expensive. I don't have a minivan, but I've seen how much they are and they are very, very expensive. And then lastly, your wealth protection plan. So you've heard us talk about how important your wealth protection plan is. It is one of the most important things that you can do when you're starting to build wealth. But let's just talk about the emergency fund here. If you do not have an emergency fund and you're about to have children, that is, financially irresponsible.

You need to have an emergency fund in place so that when life happens, you can protect your family. You absolutely need an emergency fund in cash in a high yield savings account so that you can protect your family long term. How much do you need? Well, the traditional advice is three to six months of expenses. When you have kids, bump that up to six months. Stuff is going to happen. Life is going to happen.

Life gets a lot messier when you have kids in a good way. and sometimes in a bad way. Let's get real. And so you got to make sure that you have the cash available so that you can protect those little ones. You can protect their lives. You can protect your financial life so that they can have the best life possible.

So making sure you have that emergency fund in play is the first thing I really want you to do because having that protection available is going to be very important. Now, I know this is a lot of stuff. There's a lot of stuff you have to save for and you only have nine months to do it. So that is why if you are having kids

or you plan on having kids in the future, It is important to have this stuff together before you have your first child. And if you are just getting your stuff together because maybe this was the wake-up call that you needed for your personal finances, that's absolutely amazing. And welcome to the club. Welcome to master money in the personal finance podcast. We're going to teach you how to master your money and how to build wealth for your children no matter where you are starting. That's my goal. And my goal is to bring you as much value as we possibly can.

And so if this is your wake-up call, I'm so excited that you're here. And so because you're here, what we want you to do is learn all of this stuff. you can build out that generation of wealth and truly change your family's financial future. Imagine if your entire life, your family has been dirt poor, they have not been able to get ahead with money, and you're the person who changes your family's financial tree. You can be the person that does it, and that's why I'm so excited to share this stuff with you. Because if you're the person that does it, all of a sudden, your whole entire family's

trajectory changes. So wealth builders, thank you so much for listening to this episode. I truly hope that you learned a ton about how to prepare for a baby. We wanted to make sure we encompassed every single. piece here. If you think we left anything out, please let me know and we can see if we can add it into this episode in the future so that we can make sure that we have everything covered in this episode. I want this to be the total guide to making sure that you babyproof your wallet. If you guys have any questions again, make sure you hit me up, Instagram, TikTok,

Twitter, at Master Money Co. And don't forget to leave that five star rating and review and share this with a friend who you think could get value out of this episode. If you know somebody who's going to get value in this episode, share this episode with a friend as well. I cannot thank you guys enough for listening to this episode. I truly appreciate each and every single one of you, and we will see you on the next episode. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-O-Jo, the online casino with all the latest slot and live casino games. What you win is yours to keep with no wagering requirements, instant payouts, and no minimum

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