Guest Post by Caroline Kastner
It can take months and months to prepare for the arrival of a new baby. Whether it's decorating the nursery, shopping for clothes or mentally preparing yourself for those sleepless nights.
However, it is not the only thing you need to prepare. A new baby means a whole new set of expenses. To avoid unwanted stress and to ensure this special time is not clouded by a financial crisis, you need a game plan.
Here are ten financial tips to help you prepare for your new baby.
1. Discuss Paid Maternity or Paternity Leave With Your Boss
Before the new chapter in your life begins, it's wise to brush up on the laws surrounding leave from work for family or medical reasons. Some companies offer paid maternity and paternity leave as an employee benefit while others. Talk to your employer to better understand the rules and how much you are eligible to receive, so you do not put your job at risk.
2. Speak to Your Insurance
Health insurance premiums are based on the number of people on the plan. With a baby on the way, you will need to get quotes for what it will cost to get your newborn covered. Once you have an idea of what your new monthly premium will be, you and your partner can adjust budgets accordingly.
3. Apply for Short-Term Disability Insurance
If you are trying to get pregnant, it is a good idea to apply for short-term disability insurance. This way, if your employer does not offer paid maternity leave you can replace a percentage of your income. Unfortunately, this will not work if you are already pregnant by the time you apply.
4. Sign Up or Review Your Life Insurance Policy
With your family expanding, it is a good idea to make sure your family will be covered should anything happen to you. Set aside time to review your current policy and upgrade it if needed or start investigating your options to sign up for one.
5. Plan Your Career
Are you planning on working or staying home after baby arrives? This is an answer both you and your partner need to discuss. You will need to decide if one of you will be a stay-at-home parent or if you will both be working full-time. Remember to take a close look at each other’s income and household expenses to see if it's feasible for your family to live off one income. If you still need a little extra income, you can also consider part-time work that you can do from home. Websites like Upwork and Freelancer are a great way to find small jobs to keep your family afloat.
6. Start Planning for Day Care
If you are not going to be staying home with your baby, it is imperative to look into daycare options. Even if you are only in your first trimester, it is never too early to start comparing prices and reserve a spot for your baby. It is also a good idea to check with your employer to see if they offer child care options as a benefit, or on-site childcare at a reduced cost. You could even consider using FSA money as a means to pay for daycare for your child.
7. Plan Your Baby Supplies Budget
Once your bundle of joy has arrived, you are going to be faced with a slew of baby supply costs. Start preparing your budget beforehand by going to baby stores and comparing prices for diapers, baby wipes, baby food and formula if you don’t want to breastfeed. Shop around and see if it is cheaper to buy your supplies in bulk or consider washable diapers to save money and decrease environmental waste.
8. Create a Baby Fund
Now that you have an estimate how much you will need for insurance, baby supplies and daycare, it's time to put your new budget to the test. Even if your due date is not anytime soon, it is a good idea to start setting that estimate for the month aside and deposit it into a Roth account or a mutual account for the baby.
9. Cut Back on Unnecessary Expenses
After putting together this trial run of your baby budget, you might realize that you do not have enough cashflow to cover all your expenses. Use this time to revamp your budget and cut back on unnecessary expenses wherever you can. Perhaps eat out less, downgrade your cable or phone plans, and look out for deals and coupons. By making these lifestyle adjustments now, it will make managing expenses much easier once the baby arrives.
10. Start Saving for Your Child's Education
It's no secret, and tuition is expensive. However, if you start saving early enough, you should have enough to make paying for it manageable. Review your budget on an annual basis and aim to save a small amount each month that you can invest and grow with interest.
While the cost of a new baby can be overwhelming, with a little advanced planning and an honest look at your financial health, you can avoid financial crisis mode. Which financial must-dos will you be implementing to plan for your baby?
Thanks for all these great tips, Caroline! Additionally, new mommies can get a free breast pump from their insurances, thanks to the Affordable Care Act. Apply for one if you're pregnant, before the Trump administration removes this benefit! https://www.healthcare.gov/coverage/breast-feeding-benefits/
During maternity leave, breast feeding helps save money in that it removes the need to buy formula. Mama Kat here didn't have to buy formula or milk for 13 months! That's thousands of dollars in savings!