A new baby is on the way, or maybe you’re just starting to plan. It’s a very exciting time. But financially it can be a difficult time if you haven’t prepared. Being financially prepared for a new baby will allow you to stress less and enjoy time with your new little one more.
As a first-time parent, there are probably dozens of things you haven’t thought about or don’t know that you need to know. Of course, you know that you’ll need to buy things like a crib, a stroller, a high chair, and toys, but how will your finances change and what do you need to do to prepare for those changes? Here are some things you’ll want to consider.
Review Your Health Insurance
It’s important to know exactly what your health insurance will pay for and what it won’t. The last thing you need is an unexpected hospital bill as you’re leaving with your precious bundle. Things you need to consider are prenatal care, labor and delivery costs, and additional expenses with a hospital stay.
Save for Leave
How much paid time will you be able to take off work? It’s important to think about whether or not that will be enough time and, if it’s not, save for any unpaid time you’ll want or need to take. Staying home with your baby while not receiving any income can be stressful, especially if you weren’t prepared for that possibility.
Update Your Budget
A new baby comes with new expenses. You’ll need to start budgeting for baby food, diapers, and lots of doctor co-pays as baby needs to see the doctor frequently in their first couple of years. All of that is in addition to new furniture you need to buy, a diaper bag, baby monitor, and other necessities to keep baby healthy and happy.
If you need help figuring out where all these new expenses are going to fit in your budget, consider speaking with a budgeting specialist to get an objective, unbiased perspective on your finances.
Increase Your Emergency Fund
Kids tend to be accident prone and come with lots of unexpected expenses. There’s no guarantee that you’ll have disposable income so it’s important to make sure you have at least three to six months’ worth of living expenses saved.
Update Your Health Insurance
You’ll need to add baby to your health insurance, but that also means higher premiums. Make sure you update your budget to include the extra cost of your health insurance.
Consider Life Insurance
If you don’t already have life insurance for you and your spouse, now is the time to plan for it. If the unexpected should happen, leaving baby to be raised by a single-parent, single-income household can be very difficult. You want to make sure you protect your family. Also, while no one expects the tragedy, it can be beneficial to consider a life insurance policy for your child. If a tragedy does happen, it will at least help cover funeral expenses so that you don’t have to worry about your finances during a difficult time.
Plan for Child Care
Whether you find a daycare or hire a nanny, once you go back to work you’ll have the added expense of child care. With the rising cost of child care, some families find it more financially sound to have one parent stay home and reduce their income to just one. Whatever you decide to do, child care costs will be a significant hit to your budget so you should start research costs in your area and start planning for them in advance.
Welcoming a new baby into your home is always a time of joy. Reduce any stress around this wonderful moment by taking the time to plan your way through all the new expenses before bringing your sweet bundle home.