A new baby brings a whirlwind of change to your financial life. After you paint and furnish your nursery, there’s formula, new clothes, daycare, car seats, the list goes on. And if it’s your first child, it’s time to consider adding life insurance and proper estate planning to your financial plan. With all you have to do with your finances, it can be easy to overlook some important financial steps you may want to take on behalf of your child.

Making these financial moves before your baby rolls over for the first time can set them up for a strong financial footing — because they grow up in what feels like the blink of an eye.

OPEN A 529

If you think there’s any chance your son or daughter will attend college someday, you’ll want to tackle this sooner rather than later. A 529 account is a tax-advantaged way to save for education, so long as money in the account is used for qualified education expenses. Almost every state sponsors a 529 plan (Wyoming, the outlier, uses Colorado’s plan), and many states offer additional tax breaks for in-state contributors. However, you don’t necessarily have to stick to your home state’s plan. Because of the power of compound interest, the sooner you start saving, the better.


You don’t have to do this right away, but if grandma and grandpa or others give your child some money (lucky you) this is a great place to keep it in your child’s name. Eventually having a custodial account (where you have access to your child’s account) will let you slowly hand over financial responsibility to your son or daughter, while allowing you to keep some watch over what they are doing with their money.


As soon as your child gets a Social Security number, a thief can steal it and use your child’s identity. And because your child typically isn’t using or checking their credit frequently — or at all — this could go unnoticed for some time. Freezing your child’s credit can go a long way in preventing identity theft as it’s nearly impossible for anyone to take out credit in someone’s name when that person’s credit report is frozen. While you’re at it, it’s probably a good idea to freeze your credit as well.


While this may seem like something that can wait until they have a family of their own, there are several reasons why life insurance on a child is a smart financial move. First, buying life insurance on your child can protect his or her ability to get more insurance in the future, even if there is a change in their health that would make it difficult or impossible to get.1 Whole life insurance also builds cash value that’s guaranteed to grow and not affected by the market. Your child could use the cash value throughout his or her lifetime. And finally, whole life insurance on a child can be very inexpensive as the cost is based on their age (the younger you are, the less expensive it is — and premiums never go up).


While it’s entirely possible that Instagram will be as obsolete as black-and-white television by the time your child turns 16, it’s not a bad idea to start locking down some digital assets like a Gmail address and social media accounts. While it’s great that you’re reserving these for your child, it also ensures someone else doesn’t attempt to do it as part of an identity theft scheme.

1 When you include an Additional Purchase Benefit on a policy.

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