From child care costs to figuring out how many diapers you’ll be buying per week, there are a million little budget considerations to make in preparation for a new addition to your family. Take a look at these six tips compiled by Better Money Habits to help you prepare for the arrival of your new family member.
1. Review your health insurance
Before life becomes a whirlwind revolving around the new baby, review your policy while things are relatively calm since you’ll be adding your new addition to your health insurance policy. Contact human resources if you’re covered through your job, or talk directly to your insurance provider. Bear in mind that you might be responsible for some out-of-pocket expenses for childbirth and family coverage premiums. Reviewing early will help you avoid confusion and stress by giving yourself time to ask questions and start saving.
2. Register early
Friends and family will likely be eager to help, as new additions are exciting for everyone. Setting up a baby registry with everything from diapers to a sturdy crib will allow them to pitch in at whatever price point they can. Plus, friends and family may pool resources to gift the big-ticket items, which helps you cut expenses.
3. Set up a baby savings account
Beyond the daily supplies such as diapers and formula, babies will need car seats and child care, which come with bigger price tags. Saving for all of it as early as possible will best prepare you to provide for the new baby. Consider setting up a separate savings account with automatic transfers from your checking to your savings account after each paycheck to help you accumulate savings without having to think about it. You’ll be ready for the additional expenses by the time the baby arrives.
4. Create a (new) budget
One of the best ways you can prepare for a new family member financially is by thinking through your budget early. Start by talking with your spouse or partner about any big changes that might impact your finances, such as one of you staying home after the baby comes. You will want to start planning for life with one income if one parent is planning to stay at home with the baby. Look for wiggle room in your discretionary income and savings in your current budget. Typically, this is where you’ll find the money to fund your new expenses.
Tip: If you need help putting together a budget, here are some steps to get you started.
5. Create an education fund
Given how expensive college is nowadays, the sooner you start saving for college, the better. A 529 college savings plan is a tax-advantaged investment account to be used for designated education expenses down the road. Since there’s potential for your investment to grow, the sooner you start putting money into a 529 account or other type of college savings account, the more you’ll potentially have available when your baby heads off to undergrad. Keep in mind that your investment could lose value and read over the plan’s official statement carefully. In it will be information on things like investment objectives, charges, and risks.
6. Purchase life insurance and create a will
Obtain much-needed peace of mind by considering if life insurance is right for your family and creating your will. Should anything unanticipated happen, you’ll know your family will be protected and taken care of. Plus, this is also a good time to review your existing policies and update your beneficiaries, if needed.
Getting ready to have a baby is a hectic yet fun time, but it’s also the perfect time to start preparing financially for what’s to come. Construct a plan you feel comfortable with, knowing that if you need to, you can always adjust your budget later and still be in good shape.
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