Last updated on October 9th, 2022 at 02:51 pm
Your first child is on the way, and you couldn’t be more excited. At the same time, you might be more than a little overwhelmed. Among the many things that you may be worried about is money. The steps below can help you financially prepare for baby. Keep reading to learn more.
How to Financially Prepare for Baby
Take Stock of Your Finances
The first step to financially prepare for baby, should be to get an overview of your financial situation. This will tell you what you need to focus on. Plenty of mothers-to-be stall at this first step because it can be stressful to realize that you are deeply in debt or that you are living paycheck-to-paycheck. These things are, of course, even more stressful when there’s a baby on the way. Try to think of this as an opportunity though, not something to beat yourself up over. The sooner you know where you stand, the sooner you can take action to get back on track.
If you are paying off student loans, you may want to free up some cash by refinancing them. This could give you more money each month. And, if you don’t already have one, this is also a good time to start putting money away in an emergency fund to cover any unexpected expenses. Aim to save just $500 to start and eventually enough to cover several months’ worth of expenses if necessary.
Consider Your Baby Needs
There are a couple of non-negotiable financial aspects you need to look at, and those are medical expenses and child care. For the former, take a look at your health insurance so that you understand what is covered and what your financial obligations may be. As for the latter, it’s never too soon to start making child care arrangements, given that many providers have long waiting lists.
If you are going to stay home with your new baby, and you are currently working, be sure to account for how this will affect your household budget. If you are fortunate enough to have parents or other family members who will take on child care, you should still consider a backup plan for those times when they might be sick or otherwise unable to care for your child.
As for other baby-related expenses, most of them are negotiable. Babies need diapers and a few other things, but many of the “must-have” lists you’ll see include a lot of optional items. Furthermore, you may be able to get clothes, toys, and other items either secondhand or as hand-me-downs from friends and family. Just be sure to check secondhand or used items to make sure they haven’t been recalled and are still safe to use.
Finally, you should make sure you understand what kind of maternity leave you will get, as well as whether you are eligible for FMLA (Family and Medical Leave Act) if you’d like to take more time off.
Life Insurance and Estate Planning
It might not be a fun topic to discuss, but purchasing life insurance and making a will are both important steps for new parents. Life insurance can help replace your income if anything happens to you. Be sure to get enough coverage to take care of your children until they are adults.
In your will, you can appoint a guardian for your children. You may also want to set up a trust or make other financial arrangements for them to carry them to adulthood and pay for college.
Are you a parent? Do you have any other advice for new moms about how to financially prepare for baby? Leave us a comment below.