New Baby, New Budget: Your Financial Checklist for Parenthood

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And it's available in all 50 states and around the world. Learn more at chministries.org slash faithbuy. Behold, children are a heritage from the Lord, the fruit of the womb, a reward. Psalm 127 three.

Hi, I'm Rob West. Children certainly are a precious gift from God, a reward and heritage to be cherished and valued. And along with that joy comes responsibility. Parents with a new baby could certainly use a financial checklist, and I've got one today. And then it's on to your calls at 800-525-7000.

This is faith and finance, biblical wisdom for your financial journey. So what goes on a new baby financial checklist? Well, there are more things than you might imagine, but let's start with adding the newborn to your health insurance. You have a lot going on with 2 a.m. feedings and diaper changes, but don't let updating your health insurance slip through the cracks. Many plans allow a 30-day window after birth to add your baby to your policy while you're at it. Double check that your plan covers pediatric care, vaccines, and heaven forbid, surprise hospital visits. Thankfully, welcoming a new baby qualifies as a life event, allowing you to make necessary adjustments to your plan. Next on your new baby financial checklist is another important insurance consideration, life insurance.

Not for the baby, but for you. Ensure you have a term life policy with the death benefit of at least 10 times the primary breadwinner's salary. And don't overlook the caregiving spouse. Life insurance is just as crucial given the significant cost of child care. Next up on your new baby checklist is updating your budget. You can add a whole new category called baby when deciding how much to put in that category. Think diapers, baby wipes, onesies that become too small overnight, and of course, endless amounts of baby food. And if it's a big number, just remember I had twins, so I had to do it twice. Those little expenses add up.

You may have to pull money from other budget categories to stay in the black and you can make adjustments as time goes on. But a little planning now will go a long way toward easing your stress later. Next on the list is creating or updating your will. A will isn't just about distributing assets. It's also where you designate a guardian for your child in the event that both parents pass away.

This can be a difficult decision, which is why many couples delay it. But it's essential to have a plan in place. No guardian will be perfect, but after prayerful consideration, choose the person you and your spouse believe would provide the best care. If the unthinkable happens, then be sure to finalize your will and remember you can change it later. The rest of your will outlines how your assets will be distributed, which can help prevent unnecessary family conflicts. Typically assets pass to your spouse first and then to your child or children. Proverbs 13 22 reminds us a good man leaves an inheritance to his children's children. This inheritance isn't just financial.

It should also include wisdom, values, and other blessings in addition to money and possessions if you have them. Okay, next up, start building your emergency fund if you don't already have one. You'll need three to six months worth of living expenses in the bank.

Use your budget to determine how much that is. If you had this in place before the baby, you'll probably need to increase the amount because your monthly expenses are likely to increase. With a new baby, you'll be investing in essentials, some of which, like strollers, come with surprisingly high price tags.

Covering these covering these costs becomes much harder if you face job loss or an unexpected medical situation. That's why it's wise to strengthen your emergency fund now. Next up on your new baby financial checklist, update your taxes. When your baby arrives, you can claim the child as a dependent on your tax return, which could get you a tax credit of up to two thousand dollars.

You'll also need to update your W-4 form at work so that your withholding aligns with your new situation. You may not need to have quite as much withheld since you now have another dependent. The next step on your financial checklist is setting up an education savings fund. A 529 plan is a great option as it can be used for private k-12 education, vocational or technical training, and of course college. You can choose a 529 plan in any state and use the funds for schools in any state, so there's a lot of flexibility.

Contributions to your 529 plan are not tax deferred, but the gains you receive by investing those funds can be used tax-free on qualified educational expenses. One last step to consider, place a credit freeze on your child's file with the three major credit bureaus, especially if you've applied for a social security number. This will help protect against identity theft. And there you have it, the new baby financial checklist. I hope that helps. Your calls are next, 800-525-7000.

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Choose your own provider and select the program that fits your needs and budget. CHM is the original faith-based way of taking care of your medical bill costs. Learn more at chministries.org slash faithfi. Hey, great to have you with us today on faith and finance, helping you see God as your ultimate treasure and money, a tool to accomplish God's purposes. We're taking your calls and questions throughout the broadcast today.

So if you have a financial question, really anything is in play today. Call right now, 800-525-7000. Sandy is standing by to take your calls. We've got lines open for you. 800-525-7000.

Let's go to Arkansas. Hi, Dennis. Go ahead.

I'm doing great. Thanks for your call. Yes. Can you recommend a burial insurance of any kind?

Yeah. You know, I don't recommend specific companies on that, but I will say just kind of generally this final expense insurance, you know, is essentially a small life insurance policy for a specific purpose. And that is funeral and related costs. The benefits of them are, you know, you're going to have affordable premiums. They have what is called guaranteed acceptance. So they generally don't require medical exam, you know, a quick payout. It'll cover the funeral expenses and you have a set premium. The problem with them is though that they have a higher cost per coverage. So compared to traditional life insurance options, burial insurance is, you know, a higher cost per thousand dollars of coverage and it's limited coverage.

It only goes generally up to 50,000. And so you could, if you live a long time, pay more in premiums than the policies payout amount. And then some have a two year waiting period before the full benefits are even paid. So if you passed away in those two years, God forbid, your beneficiaries might not receive the full amount. So another option would be, you know, just to save and invest, to take that same money and put it into an investment. You could just use traditional term life insurance while you're building your assets, because what the likely scenario is that there'd be plenty there, you know, once you're through your working years, that you could even designate to a beneficiary.

So that money is readily available. And so you'd just be covering your working years so that if something happened, you know, you could get more coverage, you know, with higher coverage amounts and a lower cost through just traditional life insurance. So I think, you know, these are the options that you have. But if you are wanting to go with a burial policy, then I think, you know, you need to, you know, get an insurance agent who can help you find the very best one.

Unfortunately, I wouldn't have a specific company to recommend. Yeah. All right. Well, I appreciate you all. It's my first time calling. Well, I'm so glad and I appreciate you listening. God bless you call anytime, sir. We appreciate you being on the program today. 800-525-7000 is the number to call. We'd love to hear from you if you have a question today.

800-525-7000. In the news today, home buyers are putting down more money at the closing table these days. That's right. The typical buyers down payment is now 16.3% of the home's price. That's up from 15% a year ago. At the same time, 31% of home buyers are paying all cash for a new home down from 34% a year ago.

All of this from an analyst by Redfin of County Records in the 40 most populous metropolitan areas. The typical home buyer is now putting down about $63,000, which is 4,000 more than last year. Analysts say this is largely because home prices have risen about 6% in the past year and that's on top of all the increases we had in the years prior. Also, the larger down payment statistic includes buyers who are using equity from the previous sale of a home. It's not limited to first-time home buyers who had to save up a down payment from scratch.

Obviously, with the rising home prices, if you had an existing home that you sold, you're pulling out more equity from those properties, which is allowing you then to roll that in in the form of a higher down payment. Bottom line, it's still a challenge to buy a home these days. Home affordability is difficult, but you will not regret saving as much as you can before doing it. That will help to lower the amount you have to borrow and that will save you thousands of dollars in interest over the years. Keep in mind, among the three budget busters is food and transportation and, yes, housing.

So just be careful. Don't stretch to buy a house you really can't afford because that is going to just really hinder your ability to accomplish your other financial goals as you have too much going on in the housing category. What is that number? I would say certainly no more than 30% of your take-home pay to principal interest taxes and insurance. I'd prefer that to be at 25%.

I know that's challenging, but that would really be the key because then you'd have enough left for everything else. The other piece I would say is make sure you have at least a 20% down payment. As I said here, the typical buyer right now is putting down 16.3%, which means they have private mortgage insurance. That doesn't help you. That's for the lender. It's just an extra unnecessary expense, about 1% of the mortgage, and so try to avoid that by getting that 20% down.

That's going to avoid you paying unnecessary interest, keep your payment more manageable, and if that means you need to delay that purchase for a season, I'd just say do it and save, save, save. All right, I hope that's helpful. Let's head back to the phones. 800-525-7000 to Oklahoma. Hi, Greg.

How can I help? Yeah, I try to listen to you every day when I'm around the radio, but I recently retired. I'm 70 years old and invested in a 401k every paycheck, and also my employee invested into it, and now that I'm retired, I have probably a bit of money in there, but I know absolutely nothing about the stock market.

I never let them do it. They're trying now to let me get a personal advisor, but I listen to you every day, and I'm looking to reinvest it for someone who knows more than what I do, and my wife keeps saying that we need to invest some in gold, and I'm kind of worrying about that also. Okay, well, it's a great question, Greg. Listen, you and your wife have worked and saved a long time to have this nest egg, and that's great, and I think now is that season where we do need to think about when we're in the 401k, we can kind of pick one of those life cycle or target date funds and just let it go or put it in some mutual funds, but now we really need to shift into this mode of both capital preservation and growth, so that we're focused on preserving what you got, but also growing it appropriately for the future, because even at 70 years old, we need to be thinking two to three decades out for this money to last, which is why, even at 70, I wouldn't be opposed to having somewhere between 30 and 40% in stocks. Now, maybe they're not all the high-flying growth stocks, but maybe some value dividend-paying stocks in that 30 to 40%. Maybe it is 30%. You put as much as 10% in gold, which I would like a lot. A lot of times I'll say, let's do a 5% allocation of physical gold. We'll call that your forever allocation that you don't plan on selling. You put it in a safe, and you give it away at death, and then maybe the other 5% comes by way of a gold tracker, like an exchange-traded fund, and then we've got some in stocks, and then the bulk would be in fixed-income type investments, high-quality corporates or government bonds, things like that.

I think that makes sense. I do think having an advisor who could manage that for you, just given you're being a novice in this area, which I understand you've been focused on a lot of other things, and we each have our skill sets, and so having a professional that could come alongside you and your wife understand what are your income needs, what are your risk tolerances, what other assets do you have, all of those things factor into this. At some point you'll start having to take a required minimum each year, but having somebody build that investment strategy with all of those things in mind, I think makes a lot of sense, and to the extent you want to, could even make sure that those investments are aligned with your values as a Christian. So what I would do is head to our website if you're comfortable doing that, faithfi.com, that's faithfi.com, and right at the top of the page it says find a professional, and you could do a zip code search for all of the certified kingdom advisors in the investment area in Oklahoma, and I'd interview two or three and find the one that's the best fit, and they could tackle all of these issues.

That withdrawal will be taxable, so don't let that catch you by surprise. I've got to take a break. Stay on the line. We'll finish up off the air.

We'll be right back. We're grateful for support from Eventide Investments on the Faith and Finance Program. Eventide's approach to values-based investing is grounded in the belief that humankind was created in the image of God with intrinsic dignity, value, and worth. Eventide calls this investing that makes the world rejoice. More information is available at eventideinvestments.com.

That's eventideinvestments.com. Great to have you with us today on Faith and Finance. We're taking your calls and questions. We've still got plenty of room for you, 800-525-7000. You can call right now. All right, let's head back to the phones.

We're going to go to Georgia next, and welcome Charles. Go ahead, sir. Yes, I'm a retiree from the federal government. I'm in the old civil service retirement system, so I have a pension.

I'm 61. I have just a house payment, so I have no other debt, but I was just curious. I'm not currently investing in anything. What would you recommend as an investment path for someone in their retirement?

Yeah, that's a great question, Charles. Let me ask you, what investable assets do you have? I know you have this monthly pension check that's coming in, but do you also have a lump sum of investable assets or would it be just out of your surplus each month? Just out of my surplus each month.

Okay, got it. Yeah, so when you're just starting out, I love this idea because as long as you've got that emergency fund in place, and I would say for somebody who's in their retirement season living on a fixed income, you'd probably want a minimum of six months worth of expenses. So if you're living on $2,500 a month, you're going to want $15,000 in liquid savings. I'd put it in a high-yield savings account, probably linked electronically to your checking account, your operating account, so you could move money back and forth as you need it, but you're going to need some sort of base.

So if you don't have that shored up quite yet, that would be my focus. Now, once you get beyond whatever that number of months of emergency reserve is, whether it's six months or maybe you want more, then making a systematic contribution either to accelerate that mortgage payoff or invest or both, I think would be a great option. Let me ask you about that mortgage first. How much do you owe and what's the interest rate? The interest rate's 2.99%. I refinanced it when it had dropped several years ago. So I owe about 25 years more on it.

Okay, got it. Yeah, so with you being quite a ways off from paying it off, especially with that really low, very attractive interest rate, you probably just want to let that ride. So I kind of like the idea of you directing 100% of your surplus beyond the emergency fund to an investment plan, simply because if you were much closer on getting it paid off and by paying it off, you could then free up that mortgage payment to invest even more. That would be great, but because you've still got a long runway, I'd probably just let that ride and try to do better, which you should be able to through your investments.

Now, with you being around 60, I would say you typically, and that's all this is, it's just kind of a rule of thumb, you'd probably want about a 50-50 portfolio, 50% stocks, 50% fixed income type investments. So we're talking, you know, high quality corporate bonds and government bonds, you know, that are shorter term in duration, you could do that through bond mutual funds, which is typically what you're doing when you're just starting out. Now, in terms of how to go about this, if you don't have earned income, you can't put it into an IRA. So you'd probably just want to invest it in what's called a taxable account, which just simply means as investments are sold, you are going to pay capital gains, but there'll be offset by any losses.

There's a couple of ways you could go with this. One would be our friends at soundmindinvesting.org have a plan you could follow that would give you some mutual funds and change those funds, you know, regularly to be able to respond to the market movements, but you do it yourself, you just kind of follow their plan. That would be one way to go with a, you know, smaller portfolio where you're just getting started soundmindinvesting.org.

The second would be what's called a robo advisor, which is simply where you answer a series of questions, and it's going to build a portfolio that's consistent with your age and goals and risk tolerance. And it's going to use what are called exchange traded funds, which is just like a basket of investments, but it's going to mirror the stock market indexes. So for that roughly 50% that's in stocks, it might be in the Russell, you know, 1000 or 3000, it might be in the S&P 500. But it's going to just capture the broad moves of the market for the other half that's in bonds, it might be in you know, the bond index, and you're just going to follow the market. But the nice thing about the robo is it's very low cost.

So it might be, you know, one quarter of 1% a year. And every time you make a new contribution, so let's say you're making a monthly deposit into this account, it's automatically just going to reinvest it into the same indexes. And there's not going to be any transaction costs, which just make it really efficient for somebody who's just doing a monthly investment plan. And I'd probably use either the Schwab intelligent portfolios, or betterment, either one of those Schwab intelligent, or betterment.

The last option I'll give you some I've given you three sound mind investing and then for the robo either Schwab intelligent or betterment would be if you wanted to use some faith based investing mutual funds, you could just find a couple of high quality funds from either Timothy or guide stone or eventide and invest in those and the place to get the list of those mutual funds is faithandinvesting.com slash faith five. That's faithandinvesting.com slash faith five. I hope that helps you my friend. Thanks for calling today. God bless you. Let's head to Ohio. We've got just a few moments left to Stella. Thanks for your patience.

Go ahead. Yeah, I just have a question. We have an adult daughter that lives with us. She she's 22. And the only really financial responsibility that she has is her car insurance. She doesn't have a car that she bought us. So that's paid, but her car insurance and her groceries and things like that. So we were wondering if it's biblical to begin to charge her rent to live up in our home.

She doesn't really seem motivated to go out there. So one I wanted to know, is that a biblical thing to charge your adult child rent live with you? And if so, how do you come up with the right dollar amount?

Yeah, yeah, that's great. You know, I think it absolutely can be I mean, you got to take each of these situations separate. In some cases, folks will say, Listen, we're going to cover the expenses, but there's a deadline here. And we're going to communicate clearly that this is a six month thing, or this is a 12 month thing, and then you need to be on your own.

Others will say no, we don't want to make it too cozy for you to be here and not develop your own responsibility and get on your own and save and, and work hard. And so, you know, we're going to charge you some rent. Now, in terms of establishing the amount, I would probably look at the amount of space she's occupying, just like if you were going to rent out through Airbnb a room, you know, you can determine what percentage of the house that is and back into a number. Now the other option is you could take that money without even telling her and put it in a savings account and then bless her with that as a gift on the way out the door.

Doesn't mean you have to keep it but I don't think there's anything wrong biblically at all with you deciding to charge rent and keeping it. I think the big thing is communication. You want to communicate clearly and even put it in writing so there's no hard feelings and misunderstandings. Stella, I think it's a great idea. Thanks for your call today. Well, folks, that's going to do it for us today. I'm so thankful for your encouragement. You guys are the best and we love hearing your stories, being invited into those stories, being able to journey with you and help you find God's heart for the resources He's entrusted to you. We also appreciate, as always, your kind remarks about the program today. We certainly couldn't do this without our amazing team that helps us make this happen today, our call screeners, as well as our producer, Devon Patrick, and our researcher today, Taylor Stanrich, plus everybody here at Faith Buy. May the Lord bless you. Thanks for being with us today.