Photo (cc) by efleming
This post comes from Amanda Reaume at partner site Credit.com.
Congratulations, you’re pregnant! Now that a baby is on its way, you need to prepare financially for its arrival.
If figuring out how to make things work financially with another mouth to feed makes you more nauseous than morning sickness, then this article can help you prioritize the things you need to do to ensure that you’ll be able to afford all the diapers and onesies that you’ll soon have to buy.
Here are eight things to do to prepare financially for your baby:
1. Create a budget
Having a baby is expensive, which means you’ll have to tweak your budget in order to accommodate baby expenses. Since you probably won’t be getting out too much with a newborn, you can start by cutting back on entertainment expenses and dining out. You may also consider cutting back on things like new clothes and other luxuries.
Try to save up as much as possible before the new baby is born by adopting your baby budget throughout your pregnancy. That way you’ll have a better idea of how to manage your budget when your new baby arrives.
If you’re having a hard time making ends meet despite cutting back in all possible areas, you may consider taking on some freelance work, a side hustle or a second job or doing something drastic to cut back, like moving to a cheaper apartment or house.
The last thing you want to take on while adjusting to life with a new baby is extra debt — it can take a toll on your credit score and cost you tens of thousands of dollars over the course of a lifetime. You can check your credit scores for free on Credit.com to see where you stand.
2. Move now
Many people move when they start or expand their family either because they want to live in a better area, move to a cheaper place, or move to a place with more space. If you think you might need to move because your current apartment or house isn’t big enough or because it’s too expensive, be sure to do that sooner rather than later.
The last thing you want to do is move when you’re very pregnant or have an infant. If you do that, you’ll most likely have to rely on expensive movers. You might also rush through the process of choosing a new place, which could cause you to pay hundreds more a month than you have to.
3. Save on baby buys
If you bought brand new everything that the experts recommend you have for a baby, you’ll end up spending several thousand dollars, which you might not have. Instead of buying everything, think carefully about what you might need before shopping.
Also, consider borrowing things from friends, or buying them used on Craigslist or at resale stores. Look for sales, and remember that you can resell the things you buy when your baby gets older. Just be careful not to buy things like used car seats or cribs because of safety issues.
4. Adjust your health plan
If you don’t have health insurance, now is the time to sign up. If your employer offers you a number of health plan options, now might be time to change your plan in preparation for the extra pregnancy and delivery costs. Find out how much it will cost you out of pocket with each potential option and choose one that will help save you money.
5. Start or add to an emergency fund
If you don’t have an emergency fund, now is the time to start saving money. The last thing you want is to run out of money or have financial difficulties while you or your partner is staying home with the baby. If you do have an emergency fund, consider adding to it since your expenses will increase and your income will likely decrease during the first months of your baby’s life. This extra financial cushion could be just the thing you need if something goes wrong.
6. Plan for child care
The next thing you need to do is plan for child care. If one of you wants to stay home with the baby, now is the time to make sure that you can afford it by calculating your costs and seeing if you can make it work with only one income.
If you were planning on putting your baby into day care and returning to work, be sure to look into how much it costs. New parents are often surprised at how expensive quality child care is, so be sure to budget enough for it. On top of this, in some cities it can be difficult to find and secure a child care spot for an infant or young baby. Some parents put their names on a waiting list while they’re pregnant.
7. Prepare for the worst
No one chooses to have a child thinking that the worst will happen, but sometimes the worst does happen and it’s important to prepare for it. That means that you should take out quality life insurance, disability insurance and write a will. Most people estimate that you will need life insurance worth five to 10 times your income. If your work does not already offer disability insurance, find a policy that will protect you in case you get injured. Finally, it’s important that you know who will be taking care of your child should something happen. Taking these steps can give you significant peace of mind and ensure that no matter what happens your child is cared for.
8. Save for college 529 plans
Parents want the best for their children and nowadays the best thing you can do is help them go to college. Don’t wait until they’re teenagers to start saving. Instead, start saving now and compound interest will help ensure that you can do more. Research 529 Plan options and choose one that’s right for you.