Top 5 Money Mistakes New Parents Make

finance

Inadequate life insurance.Deep in our hearts, we don’t really believe we’ll die. But our mortality rate is 100 percent – death happens. When it happens in an untimely fashion, families can be devastated both emotionally and financially.

Keep in mind, once the mortgage is paid off the cost of living for the surviving spouse drops dramatically.

The basic calculation for how much insurance to buy is simple: debt + mortgage + income to pay the surviving spouse to stay home until the youngest child reaches 18 + college. Keep in mind, once the mortgage is paid off the cost of living for the surviving spouse drops dramatically. The most contentious of these variables can be enabling the spouse to stay at home with the kids, rather than work. But this is where you really have to think about what would happen if you or your spouse died. If one of you walked out the door and didn’t come home, how would the kids feel seeing that surviving parent walk out the door to work every morning? Assuming your parents will just step in is similarly unfair – they have retirement dreams too.

No disability insurance.A good friend of mine had recently had a child and dutifully went to buy additional life insurance. The salesman suggested disability insurance but my friend was young and healthy, and turned it down. Within the year he’d been diagnosed with Multiple sclerosis (MS). His future ability to support his family (and himself) preys upon his mind and he’s told me that not buying disability insurance when he’d had the chance is his biggest regret.

{ MORE: The Only Response You'll Ever Need to Nosy Questions }

These common mistakes are avoidable. In fact, they really boil down to one mistake: failure to plan. Avoid that trap, and the rest should fall into place.

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Top 5 Money Mistakes New Parents Make

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56 comments

  1. LIZ says:

    we got so scare with college money, we are going to try to do our best

  2. mommy nhoj says:

    Another article that agitates me. As a new immigrant, I have yet to understand so many terms! At least we are trying to discuss and work on few things. One step at a time.

  3. Layne says:

    I’m a single mom so I’m worried that money will be a little tight, but I would never skip on saving for college or retirement.

  4. denette87 says:

    The day I found out I was pregnant I went and opened a college savings account for my future child. I got a lot of strange looks when I was asked how old my child was and I told them she was due in 8 months.

  5. monette3 says:

    It’s hard to think about the future when you are young, but I think he is right about life and disability insurance.

  6. Sidrah says:

    Very helpful information!

  7. Marina says:

    Great to know these things. Definitely disability insurance is worth it.

  8. Jackie says:

    wow so much to think about… I have to look up some quotes for disability insurance

  9. EbyMom says:

    this is a good article I will definitely think about it.

  10. PrettyBoogs says:

    I think it includes the monthly money we wouls send for groceries and helping with housing. a rough estimate of what it would cost between loans and out of pocket. STILL TOO MUCH!

  11. PrettyBoogs says:

    OH gosh I didnt even think about that. the 200k plus probably 50k more. YIKES!

  12. PrettyBoogs says:

    Wow it is so much for instate 4 yr. I suppose that is including everything in the mix. It is for sure something to put a lot of thought into. I am saving money for her to put directly into an account for her when she is born to help prepare her for what she wants to do with her life. Its the least i can do to help ease some financial burden in her future.

  13. sheenaholman says:

    Its a lot to think about!

  14. Taunya says:

    I can’t even imagine what college will cost when our children are old enough to attend.

  15. That college cost is crazy! No way I can save that much by the time my child is 18.

  16. says:

    saving for their golden years is more crucial as compared to spending only on their children’s education.

  17. Courtney says:

    This will be good to know for when my baby boy comes 🙂

  18. thinkobu says:

    Very informative indeed!

  19. Thankful I knew most of this!

  20. Dina says:

    Wow I need to add some of this

  21. LenaRei says:

    Great article; very informative. I’ll have to jot those tips down as a reference.

  22. Glad to see im in the right path!

  23. Glad to know that we are on the right path.

  24. Grace says:

    it is good to plan ahead, wish we had extra money to do any of these, although my spouse has life insurance for us so that is a plus

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