Pregnancy Preparedness: Part 1- Financial Readiness

The moment I decided that I was ready to be a parent I knew it was time to ensure my personal finances were in order. It helped that I was already enrolled in my accelerated Personal Financial Planning program at UCLA during the time of my IVF. The program kept me educated and motivated while I administered shots to abdomen each night. Below are some of the steps I took to prepare for my son.

First, I evaluated life insurance:

I happened to be enrolled in my insurance planning class at the time I decided to evaluate my life insurance coverage. Our professor, who has retired was a renowned CFP and Insurance agent in California, shout out to Linda! We literally reviewed every type of insurance there is, Disability; Life; Auto; Homeowners; Health; Long term care; Annuities; and Social Security. As a prospective planner I knew the first thing I needed to do when evaluating my life insurance needs was determine if I had any shortfall in my current coverage and there are three common calculations available to do just that. I used the multiple of salary method which is the fastest and least precise option to get a ballpark figure of what I was looking for before calling an insurance agent.

Calculation Option- Multiple of Salary Method
This method simply takes the salary of the wage earner and multiples it times the number of years the family will be able to continue as they are now in the event of the wage earner’s death. This is the least complex calculation and should really only be used to get a quick estimate. The other calculation options are the Human Life Value Method which is more precise and Personalized Needs Approach which is the most precise.

Once I understood how much of a benefit I needed it was time to select a provider. I did this by confirming the credit rating and financial strength of the policy provider that I wanted to use. Then, I determined the type of policy I wanted. I started with a termed life policy which would cover my current liabilities and would extend until my son is the age of majority. Also, I added a smaller whole life policy which would accumulate a cash value. This policy would be used to cover my funeral and final expenses. Finally, I added a third policy to offer a cushion to my son’s guardian to assist with childcare expenses.

Please note, it is okay to consider your employer’s group life insurance policy when evaluating your life insurance needs. Some agents will insist that an employer’s group life policy is inconsequential but everyone’s financial circumstances varies. A planner understands that one size does not always fit all and would consider all avenues when preparing a comprehensive plan.

Next, I evaluated health insurance:

When embarking on the path to parenthood it was prudent for me to understand my health insurance benefits as I would be using them quite a bit for reoccurring doctor appointments, ultrasounds, labor and delivery. I first did an independent visual review where I analyzed my deductible and maximum out of pocket cost for the year. In understanding these cost I was able to save a reserve over my 41 week pregnancy (yes, I had a late term baby lol) to cover my medical expenses. My due date was 1/2 so I desperately wanted to have a 2021 baby as I had already paid my maximum out of pocket expenses for the year but my son had different plans; I was prepared to adapt. Next, I decided to call my providers (I was in between 2 providers in 2021) to better understand my policy’s offering. It was through these calls that I learned I would be eligible to receive a FREE BREAST PUMP! Yes, that’s right I was able to order a free electronic breast pump through my health insurance provider. I was given many options to choose from too which included the most advanced pumps on the market.

Now, it was time to Prepare an Estate plan:

With both of my employers in 2021 I opted into a group legal plan policy during open enrollment in preparation for my son’s arrival. I was sold on this legal service once I realized they offered estate planning services with my coverage. I pay approximately $9 bi-weekly for this plan and from what I understand about attorney fees, this service is a fraction of the premium I would have paid hiring an attorney on my own. My service provider’s website can populate a pretty robust estate plan in 15 minutes following the completion of a brief questionnaire. Below are the materials included in my estate plan:

• Last Will and Testament (in the event I die)
• Advance Healthcare Directive aka Living Will (in the event I am incapacitated and need someone to make health decisions)
• Durable Power of Attorney (in the event I am incapacitated and need someone to make financial decisions) and,
• Revocable Living Trust for my property

The above documents had to be notarized with 2 witness who were unrelated to me and not included in the directives. You can find a FREE notary at your local bank branch, which is what I did or local councilman’s office.

Finally, I established an emergency fund:

Here is the link to my blog post about establishing an emergency fund,

• Link