A new bundle of joy is on its way! Congratulations!
This moment of your life is precious. In a couple of weeks, you’ll have tiny little feet running around the house. New toys and clothes coming in every few weeks. The excitement must be thrilling. However, this excitement comes with many question marks.
How much does a baby cost?
How much will my budget change after the baby comes?
Don’t panic just yet. We’ve got you covered! Here is a checklist of all the to-dos for preparing financially for a baby and become a pro at parenting!
1. Review your health insurance
Having a baby is expensive, even if you have health insurance. You should start forecasting your costs early in the pregnancy. This includes all medical bills, prenatal care, and labor and delivery costs.
2. Plan your maternity/paternity leave
Get a clearer understanding of how much time you will get off work and whether it would be paid or not. This can significantly impact your household finances too.
3. Draft your pre–baby budget
Your budget will have to change to accommodate the baby. A good technique to understand how much would be to create a shopping list to get an idea of how much baby products and clothes cost. This will make your spending more efficient and you will know how to manage your finances.
4. Choose a pediatrician within your insurance network
Your baby’s first doctor’s appointment will be within the first few weeks of its life. Try to find some recommendations, call your local clinics, and do thorough research before making a decision. Also, I would recommend asking the clinic and your insurance company for all charges so you aren’t hit with any unexpected out-of-budget charges.
5. Start or check your emergency fund
If you don’t already have an emergency fund, start right away. Kids are accident prone and you should anticipate some emergencies and prepare for any surprise expenses that might drain your pocket immediately.
6. Add your baby to your health insurance
Most of the time, you have up to 30 days from your child’s birth to add your baby to existing health insurance. Do it sooner or later because the first month is usually the one with the most rollercoasters!
7. Cut down credit card debt
Debit balances in thousands of dollars cost hundreds in interest. This is the money you need for your new expenses. Also, having late debt payments affects your credit history which can later affect the interest rate you get on big-ticket purchases like a home or a new car.
8. Write or adjust your will
Tragic things happen unexpectedly. It’s something we fear to even think about but it is always a possibility that we need to prepare for. Furthermore, your will is only a part of estate planning which also has a huge impact later on.
9. Save for the baby’s education and open a 529 account.
It may seem a little too soon, but do remember that college is expensive. And, it’s more expensive if you have more than one child. A 529 account offers tax-free earnings growth and tax-free withdrawals whenever the funds are used to pay for education expenses down the road. However, I would recommend requesting the 529’s official statement and reading it carefully to get a better idea of how the investment accounts works.
10. Make a financial plan with your financial advisor.
Your financial plan highlights your goals and objectives for the near future. I would recommend booking an appointment with your financial advisor as soon as possible to draft up a financial plan. This will help you start preparing for tomorrow with smarter decisions today.
If you tick off everything from this checklist, no one can beat you at this! Good luck financing and parenting!