If you’re reading this, then there’s a good chance that you and your partner are expecting a bundle of joy into your lives. Congratulations! I thought to write this post on how to financially prepare for a baby to know the steps to take as you await your child.
Steps on How to Financially Prepare for a Baby
Here are some vital considerations on how to prepare financially for a baby:
- Adjust your family’s budget
- Save for immediate and long-term expenditure
- Secure important insurance policies
- Adequately plan for your maternity leave
- choose savvy shopping
- Write or adjust your will
- Resist the temptation of baby shopping too soon
There are many things you’ll need to prepare for when expecting a new baby. One of the most important things is your financial situation. Preparing for a baby involves strategic planning, and couples must ensure they look into every aspect of the process.
Financial preparation for a baby starts right before conception. It should cover the pre-delivery stage to the post-delivery stage, and this means you will have to make certain financial adjustments to accommodate your baby.
Suppose you are expecting a little angel or have plans to expand your family. In that case, this article on how to financially prepare for a baby has every detail you need to do effectively and efficiently. You will discover how to take care of your little one adequately and stay on top of your finance.
A Step By STep Guide To Preparing Financially For A Baby
The birth of a child comes with profound financial implications. From a child’s conception to upbringing to college graduation, babies all come with financial responsibilities. Having an adequate financial plan will help tackle expenses that come with having a baby.
I have outlined eight steps on how to financially prepare for a baby.
Adjust your family’s budget
Once you are expecting a baby, you will have to make certain adjustments to your monthly budget. Critically analyze your budget and see what expenses you can cut back and what can be cut out completely.
If possible, make plans for an additional source of income. Having more than one income source would help secure you and your baby financially, cutting down some expenses.
Save for immediate and long term expenditure
Raising a child comes with a lot of expenses. Some of these expenses are incurred as soon as you give birth. Others are long-term expenditures. Immediate expenditure includes the cost of purchasing diapers, formulas, baby meals, supplements, and paying for nanny service, among others.
Long-term expenditure includes paying for tuition from kindergarten down to college and the accompanying costs of raising a child. Not having a budget with money saved up is setting yourself for severe debts.
We know that people come with lots of gifts and financial support during the arrival of a baby. However, you cannot entirely depend on it. These gifts and finances will not last forever. They can be enough to meet the short-term expenses of the baby but not for long, though.
Financial preparation for a baby’s long-term need will involve creating a sustainable financial plan and saving for your baby’s future. You can open an account that allows you to deposit cash without immediate withdrawal till a specified date.
Saving for the baby’s long-term needs cannot be overlooked as it will cover some expenses like daycare fees, babysitting costs, school activities, dance classes, music lessons, etc., ensuring you and your baby enjoy a level of stability.
Secure important insurance policies
Insurance is a necessary provision to make available when preparing for a baby. There are tens of policies offered by insurance companies in the United States. When it comes to financially preparing for a baby, I’d recommend the following insurance policies.
- Health insurance
- Life insurance
- Car insurance
- Disability insurance
- Home insurance
Insurance, in essence, is a cost-effective way to run your life. If you must be adequately prepared for a baby, you should have the insurance policies aforementioned in place.
Health insurance protects a person from the cost of medical and surgical bills. With health insurance, you can have the burden of medical expenses lessened when you or beneficiaries of your insurance policy fall sick.
Children are prone to several health challenges. To save you from the cost of going in and out of hospitals, a viable option to explore is adding your child to an existing health insurance policy if you have one or secure one before you give birth.
It is important to note that you can get health insurance as part of an employee-based or group plan in the US. If you have an existing employer plan, in most cases, you are given 30 days and, in some instances, 60 days from the child’s birthday to add your child to your existing health insurance policy.
You must get a life insurance policy that keeps your child safe if something were to happen to you. Nobody wants to think of these things, but uncertainties occur. Based on this, life insurance is vital, as it provides for your child’s education expenses and supplemental needs.
Car insurance is a mandatory insurance policy in the United States for car owners. It protects not only you and your car but also persons in your car and other road users. Aside from the legal requirements which make car insurance a mandatory policy, it is an excellent option to save on costs arising from accidents and damages to your vehicle—at the same time, allowing you to take care of your baby.
A disability insurance policy is a provision by the insurance company to pay you, the policyholder, a percentage of your monthly income if you become disabled. The idea behind insurance is to provide a form of financial leverage and cushion a variety of life risks. Even though disabilities are rare occurrences, it is best to make preparations for them.
If you need to get disability insurance, do so before you get pregnant. Most insurance companies will not offer you disability insurance when you become pregnant.
Home insurance is another vital insurance policy to secure as you prepare to have a baby. It protects your home against damages both to your building and its contents. That is, with home insurance, whatever happens to your building structure and belongings will be compensated for as deemed a peril by the insurance provider.
Although you may have insurance in place, you may not be allowed to claim on your insurance policy until you have paid up the deductible as decided by your insurance provider. To stay buoyant when disaster strikes without access to insurance claims and an emergency funding system is an excellent option.
Ensure you have up to three to six months of living expenses which you can fall back to when there is an emergency requiring immediate financial attention.
Adequately Plan for Your Maternal Leave
Employers are expected to offer maternity leaves to their female employees to cover pre and post maternity periods. Usually, it can be up to 12 or 14 weeks, depending on the employer and the pregnant woman’s condition.
During this period, the employer is expected to pay the employee her full salary or probably a significant percentage. Now, why is it essential to financially prepare for a baby?
You are likely going to be interested in a whole lot of things during your maternity leave. While you may be able to afford them, bear in mind that you are expecting a baby, and money has to be on the ground.
Choose Savvy Shopping
There is this temptation and desire to buy stuff as long as the money to purchase them is available. You must tame this desire if you are expecting a baby. One incredibly foolproof means to financially prepare for a baby is to become a savvy shopper.
The idea behind savvy shopping is that of buying only what one needs and cutting down on expenses. It would be wise to set your budget, limiting the amount you spend on clothing and accessories. I will advise you not to buy any baby clothing until you are sure of your baby’s gender.
Write or Adjust Your Will
No one wishes to die; however, death is something no one can escape. It puts the family of the loved ones in so much pain, and if the dead person happens to be a financial pillar, the constraints can become overwhelming.
We have witnessed cases where a father or mother dies or both parents, without a written will for their child/children, leaving them without any financial coverage. While every parent means good for their children, this is a wrong financial position to be in as a child.
Writing or adjusting your will is a great way to secure your child’s future financially. Speak with an attorney to ensure your will is updated to take care of your child should the unexpected happens. Furthermore, you can designate a guardian to your child to avoid the court making that decision. Put systems in place that would cater to your child’s wellbeing even if something tragic were to happen to you.
Resist the Temptation Of Baby Shopping Too Soon
Baby shopping is usually the first thing that comes to mind when women know they are expecting a baby. There is an overwhelming excitement that comes with being pregnant, followed by the urge to get the things your baby would be needing. Resist this temptation!
In my opinion, it is best to perform your baby shopping after the baby’s shower. That way, you would be buying those things that are needed. This will help you financially prepare for your baby as you would be buying the things you did not receive during the shower. Remember, being savvy is quintessential to preparing for your new child.
Why Should I Be financially Stable before Having a Baby?
Babies come with a lot of financial responsibility, and you do not want debts hanging around because you now have a baby. Financial stability before a baby will provide an advantage as it ensures you can cater to your baby’s needs without many constraints.
How does having a baby affect you financially?
Child’s care is no joke, and it can be cash draining if no proper financial preparation is made. It is outright overwhelming for single moms with no sustainable income. From the pre-delivery to the post-delivery stage, all require a high level of care and finance to cater for mother and child adequately.
The pregnancy stage is a delicate period both for the mother and child, and it requires all forms of care, which can create a dent in your finances. If you don’t financially prepare for a baby, you will likely run into debt.
How much money should be saved before having a baby?
There is no fixed amount to have to be sure you are financially ready for a baby. However, after considering the care for the pregnant mother, hospital bills, baby shopping, and other things associated with having a baby, you should have between $35,000 to $60,000 saved up for your baby.
In addition, securing the insurance policies I mentioned in the body of this article will help provide a level of financial leverage—also, look for financial aids through special programs designed to care for mothers and their newborn babies.
To adequately prepare for your baby, you must sufficiently plan your finance. It’s time to cut back and cut off all excesses. If they aren’t needed or wanted, they aren’t important and shouldn’t be on your budget.
When you are expecting a baby, talk with your partner and plan how your family budget will take a different shape now that a baby is coming. It will go a long way in preparing the minds of both parents as they financially prepare for a baby. Single moms should seek support and financial aids from family, friends, and special programs that offer financial aids.
Your baby deserves nothing but the best, and one of the best ways to make their entry to the world and ultimately their upbringing smooth is to be financially prepared. You must not have all the dollars in the world to be financially prepared. However, finances are critical in your preparation while you await your bundle of joy.
By following these foolproof tips on how to financially prepare for a baby, you will be setting yourself as Parent of the Year. Cheers.