Preparing Financially for a Baby
Preparing Financially for a Baby
Having lived the time of preparing for a baby firsthand the past few months, it makes this topic particularly relevant for me. My wife and I welcomed our son, Brooks, into the world in February 2023. This was such an exciting and joyful time for us. But it also came with nine months of commitments, responsibilities, and preparation before his arrival. Medical paperwork, doctor’s appointments, hospital visit, baby registry, home updates, and essential baby purchases are examples of things that fill up this time. Then, there is the future financial change of taking care of a new little one. It’s not possible to prepare for everything that will come your way but understanding what was ahead of us financially provided a plan of action. So here are a few tips we learned and applied financially that were massively beneficial and can help you enjoy your new little one the most.
- Consider healthcare costs: Investigate the costs of prenatal care, sonograms, delivery, hospital stay, doula, and any other medical procedures you may need. Your provider should be able to provide estimates of these.
- Understand healthcare insurance plan options: Research coverage options through the father and/or mother’s employer. Understand the probable change in deductibles, coinsurance, or premiums when adding a child to a parent’s healthcare plan. Balance these items with the available pediatricians and other providers through each health insurance plan.
- Save for the larger ticket items: Set aside money each month in a dedicated savings account specifically for the more expensive baby items. These items include nursery furniture, stroller, car seat(s), second freezer, and bassinet. This allows you to buy them when ready or when the best deal arrives. I favor high yield savings accounts as a place to park these savings for the short-term.
- Plan for time off work: Consider the financial impact of taking time off work and the benefits your employer provides once your child is born. Some employers offer paid paternity or maternity leave, while others do not. Some employers also offer short-term disability benefits for recovering mothers. Plan accordingly to what’s available for you.
- Shop around for daycare: Daycare options are one of the first areas to tackle once pregnant. Open daycare slots fill up fast and there’s often waitlists. Touring and seeing various daycares can allow you to find the right fit care and cost wise. Daycare costs are usually the single largest, regular expense once a child is born so having a plan here is crucial.
- Reevaluate your spending: This is a healthy practice to do each year, not just when a baby is coming soon. Look at your current spending habits and see if there are any areas where you can cut back to make room for baby-related expenses, medical costs, or baby gear.
By taking these steps, you can help ensure that you are building a solid foundation financially for your family and be prepared for the arrival of your new bundle of joy.
