How to Financially Prepare for Having a Baby
Congrats, you’re having a baby! This time can be exciting and a little scary. While you’re picking out cute little clothes, bibs and baby toys, you should also be thinking about how you can prepare financially before having the baby.
Here’s a list of helpful tips to get you ready.
Adjust Your Budget
Having a baby means adjusting your budget to include all the expenses that come with that little bundle of joy. Some of the larger, more expensive items you’ll need, like a crib, car seat and stroller, are one-time costs. But you’ll also need to factor in the recurring monthly costs, like diapers and child care. If you or your partner plan to take extra time off work or plan to be a stay-at-home parent, that will also affect your budget.
Understand Your Health Insurance
Talk to your employer’s HR department or your insurer to estimate your costs for prenatal care, delivery and postnatal care. Knowing what you’ll have to pay once baby arrives will help you plan your budget before you get the hospital bill.
You’ll also have to choose a pediatrician. Getting referrals from friends and family and calling local clinics to talk to potential doctors are key factors in choosing one for your baby. Don’t forget to check if that doctor is in your insurance network. By picking an in-network doctor, you’ll avoid out-of-network charges.
Plan for Child Care Costs
For many, child care is one of the most expensive costs when you have a baby. If you plan to return to work after the baby is born, you’ll want to look at your options sooner rather than later. Some daycares and in-home providers have waiting lists and may ask for a deposit to be put on the list. You can expect to spend an average of around $1,000 per month, depending on costs in your area and how often your child will attend.
If you choose to stay home with your baby, plan how that loss of income will affect your budget as well.
Save, Save, Save
If you don’t have an emergency fund yet, now’s the time to start one. You should aim to save three to six months’ worth of living expenses. With more of your budget going to your baby, you’ll want to have some savings built up for emergencies.
Start a College Fund for Baby
The sooner you start a college fund, the better. Opening a 529 plan is a great way to start saving money for your baby’s future. A 529 plan offers tax-free growth and withdrawals for college. The longer you have money in the college plan, the more interest you’ll earn for your child’s future goals.
Having a baby is a special time. By saving, planning and knowing what to expect, you can help your growing family with financial success.