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10 Ways to Get your Finances Baby Ready

Posted by Alexandra Porto on

While you are focused on prepping your baby’s nursery or the changes happening to your pregnant body, there’s another major change demanding your attention: what’s going on with your wallet. Having a new baby is an amazing journey, but it’s also one of the most expensive life changes. Recent stats estimate that children cost parents on average almost $300,000 from birth until they are 18 years old, and that’s not including college tuition or rising inflation costs.

These numbers can be overwhelming, but if you set aside time for finances each month, you’ll be able to tackle these expenses head-on. Money is more than just mathematical figures; there’s an emotional connection too. Of course, you want to give your child the world, but setting realistic budgets and being diligent about where your funds are going will help you better provide for them in the long run.

So, rip off that band-aid and get ready to take a deep dive into your finances. We promise prepping finances now will give you more quality time spent with your little one when they are here. That way, you aren’t left stressing over cash flow issues later.

Track your spending

Photo Credit: Mikhail Nilov, Pexels

1.      Track Your Spending & Find Ways to Cut Back

Financial experts say taking a look at your past and current spending patterns is the best place to start. Grab your credit card statements and jot any balances you haven’t paid yet in a spreadsheet, ordered from highest to lowest interest rates. Work on paying down as much debt as possible, and see if you can consolidate it into a lower interest personal loan, or call your credit card company and ask for a lower rate.

Get a complete picture of your finances by categorizing where your money is going each month. Many apps and tools can help track this, like You Need a Budget or Mint. Once you’ve figured out your spending habits, see where there is room to cut back and divert those funds toward baby expenses instead.

Are you struggling to get through this exercise? Ask for some support, whether it’s from your employee assistance program, free community services, a debt consulting nonprofit, or a trusted family member. We promise this is the hardest step on our list, so be proud once you’ve done the hard work to get the full scope of your financial baseline.

2.      Get Familiar with Your Health Insurance & Medical Costs

Next, you’ll want to familiarize yourself with your employer’s health insurance plans. If you and your co-parent (if there is one) both work, then compare each other’s plans. See which offers better benefits for you and your baby on the way, and check what is covered. Right now, the most important benefits are pre- and post-natal care, your delivery at the hospital, medical screenings, and service providers like doulas. Ask for insurance cost estimates and use in-network providers whenever possible to keep your health costs down.

Your insurance will usually cover essentials like a breast pump, and the hospital will even send you home with some diapers, formula samples, and that infamous blanket. Take the “freebies” because once the hospital bill comes, you’ll see it was all paid for and far from actually free. It's hard to think about paperwork once you have that little cutie in your arms, but don’t forget to add them to your health insurance policy. Typically, this is required within 30 days of birth, but check your specific health insurance provider for details. You’ll also want to scope out an in-network pediatrician, so you are all set for the baby’s first check-up.

Get familiar with health insurance

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3.      Plan Your Parental Leave

Haven’t spoken to Human Resources yet about your parental leave? It’s time to pick up the phone. Paid leave policy is at your employer's discretion usually, but it can have a significant impact on your finances. Once you know your employer’s policies, look into state laws. Some like New York, New Jersey, California, Colorado, Connecticut, Massachusetts, Oregon, Rhode Island, and Washington offer paid family leave policies.

Be sure to give your employer at least 30 days’ notice if taking time off under the Federal Family and Medical Leave Act. Unfortunately, the U.S. does not have any federal mandated paid parental leave, so this act only allows a maximum of 12 unpaid weeks for qualifying companies employing 50+ staff. Discuss options with your partner for how your leave policies can be combined or staggered. You might be able to extend your maternity leave by utilizing short-term disability benefits or using vacation or sick days.

4. Figure Out What You Need & Set a Budget

You already figured out your spending profile, so now it’s time to plan for the future by setting up a budget. Be sure to adjust your income on the budget if you need to take some unpaid leave or reduced time. Think about what you need for your new baby. Basics like food, clothes, diapers, formula, medical costs, housing, and childcare are a great start. Then add in optional purchases like a higher-end stroller vs. a household name, a convertible crib, and other nice-to-haves.

If there’s no room in your budget for higher-ticket baby items, try forgoing a brand name for a similar lower-priced but well-reviewed item. Another tip is to add these to your baby registry as a group gift instead. If you have difficulty budgeting, check out a free consultation with a financial planner through a program like America Saves.

Compare childcare options

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5.      Compare Childcare Options

There are a lot of childcare solutions out there, from daycares to nannies or relatives. Each one comes with its own pros and cons, and costs vary based on the schedule and where you live. Before your baby is here, figure out what works best for you. Visit different family care providers and compare pricing. Interview nannies or talk to relatives you trust about babysitting your newborn.

Some employers even offer subsidized daycare programs, so check in again with HR to see if that’s an option. If hiring a private nanny, don’t skip on the background and reference checks. Ideally, the caregivers will be experienced moms trained in early child development and education.

6.      Research Life Insurance Plans

If life has shown us anything these last few years, it is that it’s unpredictable. With this in mind, it is never too early to plan for unforeseen circumstances. With the new baby on the way, now is the recommended time to increase or purchase a new life insurance policy. Experts typically suggest a 15 or 20-year term life insurance policy at least six times your gross annual salary. You might also want to add your child as another beneficiary of this policy. No one likes to think of someone passing, but it’s important to be willing to confront these issues to keep your family secure.

Bring your family peace of mind

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7.      Update Your Will & Retirement Beneficiaries

After you’ve updated your life insurance beneficiaries, you’ll also want to add your child as a beneficiary on any deferred income or retirement plans like a 401(k) through your employer. Designating your child as a beneficiary of your estate will also allow them to claim life insurance benefits if the unthinkable happens. If you want these funds disbursed in a specific way or timeframe, it’s best to start putting together your will.

Even more important than their inheritance, designating a guardian is essential as a parent. It might seem morbid, but it will bring you comfort knowing your child will be cared for by someone you trust and love if something unfortunate happens. Hire an estate attorney to draft and file this paperwork. On average, it costs about $1,000, but it will be priceless once you realize the peace of mind it brings your family.

8.      Start an Emergency Fund if You Haven’t Already

If you haven’t already been saving for a rainy day, now is a good time to start. Get comfortable with the idea of tightening your purse strings and aim to put aside six months to a year of living expenses. If that’s too lofty of a goal, don’t worry. Save whatever you can right now. Even if it is just coins in a jar, that’s okay; you have to start somewhere. This savings mentality will help you slowly build your emergency fund, which will be there for your family if any accidents happen. And any mom of toddlers will tell you those kids are accident-prone, so now is the time to gear up those savings.

Clear out the clutter for a calming nursery

Photo Credit: Collov Home Design, Unsplash

9.      Clear Extra Space for Baby & Pocket the Earnings

Are you dreaming of a spacious nursery? The key is less clutter. Now is a good time to clear your home of things you aren’t using, so there’s more room for your little bundle of joy. You might even find some valuable treasure that’s been collecting dust in your home. Sign up using a selling app like Depop, eBay, or Amazon and make some extra cash while you get the house ready for baby. Take this idea up a notch and start reselling as a side-gig for a second income stream. Alternatively, if selling isn’t for you, you can donate to a nonprofit and claim an itemized tax deduction.

10. It’s Never too Early to Set up a College Fund

College costs are on the rise, especially with the rate of inflation. Rather than paying that large bill later, take advantage of compound interest and get a head start now. Open a 529 college savings investment plan in your state. You can even get it set up now and add your baby’s social security number up to 6 months later. Then, ask family and friends to skip the toys and donate to your child’s 529 plan instead. The next 18 years will go by in a flash, so this will set your child up for higher education and financial success.

Set them up for future success

Photo Credit: Pang Yuhao, Unsplash


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