How to Financially Prepare for a Baby
For couples with a bun in the oven, it can be a very exciting and scary time. Babies are incredibly precious and it is no secret, they are incredibly expensive. Besides the cute clothes and mounds of diapers to purchase, there are also medical expenses and time off from work that you will have to consider. Here are some tips to financially prepare for a baby.
How to Plan for Baby Before the Delivery
The best-laid plans often can change on a dime when it comes to a baby. You cannot guarantee to know the day or hour baby will come and how it will actually change your life. However, there are some things you can plan for prior to the baby’s first appearance.
- Health Insurance: Even with a health insurance plan, the cost of prenatal care, delivery, and postpartum care can still cost you a pretty penny. The average American still pays over $4500 with insurance for this care. Before the baby arrives, it is a great plan to get to know your insurance plan and what part of the bill you will be tagged with. This will help with the sticker shock once you and baby leave the hospital.
- Leave of Absence: Understanding your maternity/paternity leave is another important part of budgeting and planning. Will you and your partner get paid during this time? If not, how will that impact your finances? Lastly, get to know your company’s and state’s policies regarding these policies to ensure you get ample time off without drastically affecting your finances.
- Budget Planning: There is no doubt about it, your expenses are going to change. In your budget now will be diapers, wipes, perhaps formula, daycare, extra food, and other household expenses.
- Choose an In-Network Pediatrician: Another aspect of your insurance plan and budgeting is choosing a new pediatrician for your bundle of joy. You must make sure the pediatrician you choose is within your network. This will ensure you do not pay any extra fees for co-payments or a remainder of a bill if your insurance is out-of-network.
- Emergency Fund: An emergency fund is something every family should have. This is a great way to be prepared for any unexpected crisis. The last thing you need with a new baby is to be stranded without a car or to not have money for milk and diapers. Many financial experts say that having three to six months’ worth of expenses saved up is a good goal. Keep in mind, you can start slowly and work your way to that amount.
The First 30-Days
Once the baby makes his or her first appearance, life will change in many ways.
- Health Insurance for Baby: Having a sick baby and no health coverage is a very undesirable position to be in. Most insurers allow you up to 30 days to add your newborn to your policy. It is best to do as soon as you can to avoid any catastrophes.
- Life Insurance: No one can anticipate the tragedy of losing a new member to the family. As sad as that is, it does happen. Budgeting for a life insurance plan for your baby is a great way to stay safe and secure. The good news is that these policies for babies are generally inexpensive.
- Child Care: Perhaps one of the biggest financial burdens to new parents is child care. Planning early for the right nanny or daycare is essential. Places and people do get booked up fast.
Beyond the 30 Days
- Do you have a will? Preparing for whatever the future holds can be incredibly difficult. Do you have a plan in place should both parents die? A will is a great tool to keep your family secure.
- Savings account for baby: A great way to get your baby off to a good start in life is to start a savings account. Birthday cash and holiday money can add up quickly.
- Keep your personal goals: Lastly, don’t forget about yourself. Are you still saving for retirement? Do not let your financial goals slip through the cracks.
Financially, raising a baby can be challenging. However, if you stay organized, keep a budget and prepare for anything the future might hold, you will be in good shape. Just keep up to date with your insurance, your budget, your will and all the financial goals you have previously set.