Getting your finances ready for a new baby is one of the more important, and oft-overlooked, elements in your decision to start a family. Here are a few strategies you can use to get into better financial shape before the baby arrives.
Figure Out Which Big Expenses Are Essential
Naturally, you’ve probably already given some thought to the obvious big-ticket items you’ll need for the baby, cribs, strollers, etc. But, before your bundle of joy arrives, you’ll need to figure out some of the other stuff—like will you need to trade in your fast and fun convertible for a more family friendly ride? Or perhaps you’ll need to upgrade a room in your house to accommodate the baby—definitely something to think about.
Consider Health Insurance
Even if you’re currently insured, the costs of all the pre-baby checkups, actually having the baby, and even post-delivery will all add up. Take a look at your plan and evaluate the maternity care, you may want to consider upgrading your policy if needed.
Plus, after the baby is born, you’ll want to account for all the scheduled visits your new baby will need to make sure it’s growing properly. Find a pediatrician before your baby is born to avoid the headache of finding one last minute.
Decide How You Will Address Debt Moving Forward
If you’ve got student loan or credit card debt looming, consider how it will impact your ability to save for the future. Pay down your debts as much as possible before you conceive (sometimes life doesn’t allow for this), and get your payment plan in order before the baby arrives. You may want to look into getting assistance for consolidating loans to make things easier on your wallet. Your monthly budget will need to account for debt, as well as all the newfound baby expenses.
Have a Pre and Post-Baby Budget
Make a list of all the things you’ll need to stock up on before baby comes. This includes all the costs like medical expenses, setting up the nursery and more. You may be able to get a lot of items from your baby shower, but be prepared to pay for some of the big stuff you may not be lucky enough to get as a gift.
Additionally, you’ll want to calculate the costs of baby essentials you’ll need after the big arrival—diapers, new clothes, formula, baby food, and if you can, start putting money away now so these expenses don’t come as a surprise when there’s an extra mouth to feed.
Consider Parental Leave
How much time you or your partner has off, and whether it’s paid or unpaid can really make a difference in your financial budget. Figure out the logistics as early as possible, and be sure you understand the ins and outs of your respective benefits packages. If it looks like a portion of your parental leave may be unpaid, you’ll need to build the loss of income into your budget.