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Your Bank > Education and Advice > CNB University

Starting a Family

L Haelen 2016
Laurie Haelen, AIF® is Senior Vice President and Team Leader - Wealth Advisor and can be reached at LHaelen@CNBank.com or (585) 419-0670 x41970.

The decision to start a family is one of the most exciting, and daunting, decisions you can face. As you are swept up in the joy of planning for life with your new child, there are also many financial planning decisions to think about. It is your task as a parent to ensure the proper steps are taken.

Your Budget

The first step in paving the path toward financial success is to ensure your budget is accommodative of the financial changes that come with the birth of a child. In addition to your living expenses increasing, there also may be a shift in the family income if you decide to work less, or not at all, in order to care for your baby. The major expenses that increase include, child care, groceries, household, medical, and clothing.

As you revise your budget, it is also critical to ensure you have three to six months’ worth of living expenses for unexpected cash outlays, such as an illness, a major auto repair or losing your job. The good news is that you will get some financial benefits at tax time to help defray the costs of raising a child.

You should begin saving for your child’s education as early as possible, and the good news is there are many ways to do this effectively. You can utilize a savings or money market account, making monthly contributions, or take advantage of various investment vehicles including a tax-advantaged 529 College Savings Plan.

Your Estate Plan

One of the most overlooked issues I see with new parents is that of estate planning. It is crucial to the welfare of your child that there is a contingency plan for the unlikely (and hard to fathom) event that you die before your child grows up. Therefore, it is time for you to draw up a will or revise it accordingly. Issues include:

  1. Nominating a guardian for your child. This is often one of the hardest and most critical decisions a parent has to face, but if you don’t do it, the court will decide.
  2. Designating how you want your assets to be distributed. This could include setting up a trust to ensure that your funds are protected for your family.
  3. If there is a trust, you will need to designate a trustee. The trustee’s job is to ensure the funds are paid out according to your wishes.
  4. Naming an executor for your estate. This can be a very personal role, as the tasks include the disposition of all of your property, including household items, such as jewelry, furniture, letters, etc.

The best way to begin an estate plan is with a good attorney who specializes in this type of work. Keep in mind the initial task is very daunting, but it tends to bring one peace of mind.

Your Insurance Coverage

The last critical planning element for new parents is a thorough review of health care, life and disability insurance to ensure you’re covered in the event of an untimely death of a parent or if you are unable to work for an extended period of time. Many experts recommend that you have life insurance equal to five-to-ten times your annual salary, and disability insurance will likely replace 50-70 percent of your earnings in the event you need it.

Perhaps less obvious, but vitally important, is a review of your health care coverage—ideally before you become pregnant—to understand exactly what is covered. This will prevent surprise expenses, as you will incur a lot more medical costs during your pregnancy.

All of these decisions should be reviewed periodically to ensure everything is still relevant to your situation.

How CNB Can Help

Starting a family is one of the most fulfilling journeys you will embark on. Having some help navigating the financial decisions involved may make it much easier. Please feel free to contact me at (585) 419-0670 ext. 41970 if you would like assistance with some of these financial planning concerns. Our team will be happy to help you navigate through and make the process easier. I wish you much happiness and good fortune as you begin this next phase of your life.

This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.

Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Canandaigua National Bank & Trust does not provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.