Personal Finance Tips for New Parents Expecting a Baby
Preparing for the arrival of a new family member is linked to dealing with an array of essentials. Making sure the nursery is ready, buying clothes and hygienic supplies, finishing up on baby care books before the birth… all of this is obviously stressful. Still, you will also have to factor in the financial side of things.
The cost of having a baby in the US is far from negligible. In fact, estimates suggest new parents should be prepared to spend an average of 10,808 dollars. This is the cost of delivery alone for uncomplicated births.
Financial planning should happen in the months before the baby arrives. If you don’t know what to focus on, here are a few of the key essentials to tackle.
Focus on Pre-Delivery Planning First
While the costs of raising a child will add up, financial experts recommend focusing on pre-delivery and delivery financial planning first.
You will need to go to medical checkups, there will be lab exams and supplements to buy. Knowing where and how you’re going to be giving birth will also give you a clear idea about the amount you should be prepared to spend on the hospital procedure.
Start saving for the medical expenses as early as possible. Know what’s covered by insurance and what you’ll need to handle on your own. In addition, you may want to set up an emergency fund that will cover for unplanned medical expenditure. If you don’t use the money in pre-delivery and delivery expenses, you can continue adding to it and saving for the future of your child.
What Will Happen after the Delivery?
The average maternity leave in the US lasts solely 10 weeks. That’s a very, very short period of time. It will go by pretty fast. Even if your company offers paid maternity leave that’s longer, you’ll still have to return to your job in a couple of months.
When this happens, you’ll have to plan for daycare and the related costs.
It’s best to have a plan before you give birth. After the arrival of the new family member, you’ll be left with very little time to do strategic planning for the future.
If both you and your husband will be going back to work soon after the delivery, you will need to decide what the most affordable and effective form of daycare is going to be. While the number of true gentlemen going on paternity leave is growing, such an arrangement is simply not feasible for most families.
Will you be having a relative taking care of the baby? Will you be paying a nanny or opting for another choice? Research in advance to know how much daycare is going to cost you in the first year. You should have at least a portion of the money saved in advance so that you don’t experience financial stress after the birth.
Post-Natal Care Costs
Both mommy and baby need post-natal care. Needless to say, such assistance doesn’t come for free.
Medical checkups with a pediatrician that’s included in your insurance network are the best choice. Once again, you have to choose the physician in advance. Medical assistance in the first weeks of life is incredibly important and you can’t postpone the selection of the right doctor.
Factor in other essentials like supplements, medicines, diapers, wipes, hygienic supplies and formula for the first year. While these may seem like little things, the costs will quickly add up to a serious amount.
Always Consider Freebies and Hand-Me Downs
Babies grow so fast that you’ll be using certain supplies, accessories and clothes for just a couple of months.
To reduce the financial burden, you should definitely consider freebies and hand-me down products from friends.
Many companies offer free samples and gift bags to new mothers. You can find diapers, formula and baby cosmetics free of charge if you do a bit of online research.
Talk to your friends who have a child. Chances are that they’ll be capable of providing numerous essentials like a stroller, car seat, a crib or a nursing chair. Once you outgrow these essentials, you can either return them to the original owner or pass them on to another new mommy in need.
It’s Not Too Early to Start a College Fund
It’s a good idea to start thinking about your child’s education even before they’re born.
Public school, the most affordable of all options will cost parents 10,615 dollars in a year. Enabling your child to receive good higher education is going to be even more expensive.
Start setting up a college fund as early as possible. You may want to talk to a financial advisor about the best investment option that will yield good returns. Saving for the future of your child needs to begin as early as possible. This rule is even more important for families that plan to raise more than one child.
A college fund needs to be separate from the family’s emergency fund. An emergency fund covers unexpected expenditure like medical costs, home renovations or relocation. The college fund shouldn’t be used for such purposes and it needs to be saved for school-related expenses only.
Finally, relax and take a deep breath. You will manage, even if you haven’t started financial planning as soon as you found out you were pregnant. Tackle the essentials and immediate costs first. once you’re done with those, you can move on to doing long-term financial planning for the future of your child.
Amanda Key is a natural born financial manager with a flair for connecting with people. She enjoys interacting with all cultures and sharing her skills with everyone. Passion and diligence make Amanda a great specialist in the finance area, especially in money-saving questions.