A baby on the way is a very exciting time for any family. Whether you’re new parents or adding to your growing family, preparing for your new arrival can feel overwhelming. One of your biggest concerns is probably your finances. According to Parenting.com, the average middle class family will spend $12,000 on child-related expenses in the baby’s first year of life. That’s not a small chunk of change. So how do you prepare financially while trying to juggle all the new responsibilities that come with a new baby at the same time?
The earlier you start preparing, the better you’ll be able to set up for your baby’s future. Before your baby’s arrival, take a look at this checklist on easy things you can do to financially prepare now:
Redo Your Budget
With the arrival of your new bundle of joy, life as you know it will probably never be the same again. The same goes for your budget. It’s time to review and redo your budget, as baby expenses will now take up a large portion of your spending. Do your research and understand how much baby items really cost. From food to diapers, it’s probably more expensive than you think. You should also make a shopping list of everything you need once the baby arrives. Once you have an estimate, figure out how you can scale back your budget. Obvious areas to cut back on are entertainment and dining out (as new parents, you probably won’t have time for that anyway!).
Understand Your Health Insurance
One of the biggest costs to a new baby are medical costs. Not only does your baby need healthcare, which is especially crucial in his/her first year, but labor and delivery costs can be significant also. Well before your expected due date, take some time to understand your health insurance. Be sure to understand what is covered and what you will be paying for out-of-pocket. Also, once your child is born, make sure to add him/her to your own policy. Most health plans require you to do this within 30-60 days. Also consider choosing a pediatrician that is within your network to limit costs.
Shop Wisely for Baby Items
There are so many cute baby items on the market that you’ll probably want to spend a small fortune on. Try to prevent that from happening though. Yes, you’ll want to spoil your baby and that’s totally fine, but keep in mind that babies grow into toddlers very quickly. That also means they’ll grow out of those expensive clothes and toys you bought quickly, as well. There are a few items worth the cost, but learn to shop wisely for baby items and spend where it makes the most sense, like gear and food.
Plan for Childcare
Most companies in the United States offer new mothers 3 months of maternity leave and much less for dads. Eventually, you’ll have to go back to work and think about childcare. Having the help of grandparents or other friends and family will save you a ton, but if not – make sure to plan for childcare expenses financially and well ahead of time. You will also want to interview nannies or visit daycare centers to make sure you find the right fit for your family.
Start Thinking About College
Lastly, it’s never too early to start thinking about college. It may be 18 years away, but it’s also a huge expense so you want to start preparing for it now. You should start putting away money for your child’s education as soon as possible. Consider putting your money into a 529 college savings plan, where earnings will grow tax-free and won’t be taxed when taken out to pay for college.
Need help with a college savings plan? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, email Mary.Laferriere@cunamutual.com or stop in to see us!*
Your finances will change drastically with a baby on the way, but you’ll be able to worry less and spend more quality time with your little one – with the right planning and preparing.
*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
Article Source: Connie Mei for moneyning.com