"I have a baby on the way and want to save for a house": How can I navigate complex pay structures and plan for my growing family's future?

Hey Money Minder, my wife and I have been DIY-ing our finances based on what I’ve read up on money stuff. But now things are getting more complicated with my pay, a baby on the way, and our dream of buying a house.

Currently, we’ve saved up around 160k in the bank and stocks, not counting retirement funds like Roth or 401k. No treasury stuff, and no HYSA yet.

Our net income for 2024 is about 115,500 USD, but it’s expected to increase to 135,000 in 2025 and 235,000 in 2026.

Our fixed bills are about 3,000 USD, plus our credit card spending which varies a lot, so let me know if you need that info for advice.

Our main goals are prepping for the baby and saving up for a house. We’re aiming to jump into the housing market in Jan 2027, with the total cost around 1.5 to 2 million USD in our area.

Should we set up a 529 plan for the baby?
Any other tips for prepping for a baby?
Any cool tools besides Excel that you’d recommend?
Do you think we should hire a financial planner?

Thanks a bunch!

Response from THE MONEY MINDER:

Hello There,

Hello,

Congratulations on the upcoming arrival of your baby. It’s great to hear that you are proactive about managing your finances and planning for the future. Based on the details you’ve provided, it’s clear that you have some solid savings and ambitious goals in mind.

Given that saving for the baby and a house are your priorities, let’s address your concerns one by one. First, regarding the 529 plan, it can be a valuable tool to start saving for your child’s education expenses. However, it’s crucial to ensure that you have a solid emergency fund, retirement savings, and a healthy financial situation before committing to a 529 plan.

With a baby on the way, it’s essential to review your insurance coverage, create a budget for baby-related expenses, and consider setting up a will or trust to protect your growing family. Additionally, having a solid savings plan in place for unexpected costs that may arise with a new baby is crucial.

When it comes to financial planning tools, you might consider using budgeting apps like YNAB or Mint to help track your expenses and savings goals. While Excel is a useful tool, these apps can provide more comprehensive insights into your finances.

As for the question of getting a financial planner, it could be beneficial, especially given the complexity of your pay structure and the significant increase in income anticipated over the next few years. A financial planner can help you navigate your financial goals, investments, and savings strategies, providing personalized advice tailored to your specific needs.

In conclusion, taking a realistic and practical approach to your finances, setting clear savings goals, and monitoring your progress regularly will be key to achieving your goals of saving for the baby, a house, and securing your financial future. Remember to review your financial plan regularly and make adjustments as needed with changing circumstances.

Best of luck on your financial journey!

Farewell from THE MONEY MINDER.