How to Make Financial Plans for a New Baby
Making financial plans and going through the process of budgeting for a new baby will help you become aware of the many costs that are involved in raising a child. Although I don’t believe you can ever really be ready for a baby – financially or otherwise - there are some things you can do before baby arrives to make life go a little smother.
Making financial plans and going through the process of budgeting for a new baby will help you become aware of the many costs that are involved in raising a child. Although I don’t believe you can ever really be ready for a baby – financially or otherwise - there are some things you can do before baby arrives to make life go a little smother.
How Much Does a Baby Cost?
As of this writing in 2008, according to the U.S. Department of Agriculture the average middle class family will spend over $180,000 to raise a baby from birth to age 17. And that's before you even consider college tuition. It can be an overwhelming figure and the truth is you’re paying that over time. What most expectant parents are interested in is how their finances will be affected as soon as they bring baby home.
Study Your Health Insurance
It’s a good idea to begin thinking about finances as soon as you know you’re pregnant. The first thing you’ll want to consider is health insurance. Familiarize yourself with the details of pregnancy, childbirth, and infant care. If you and your spouse are both covered, you’ll want to compare policies to determine whose coverage offers the best benefits. (If you’re already pregnant, you probably won’t be able to switch policies for the pre-natal care because the pregnancy is considered a pre-existing condition.)
To Work or Not to Work?
If there is the remotest possibility that you or your might leave the workforce to be a stay home parent, use the time of pregnancy as a trial run to live on a single salary. You’ll find out quickly if you can live on one paycheck. Even if you decide that’s not a feasible option, at least you’ll have saved a substantial emergency fund.
Ask Around
One of the best ways to get a realistic, and timely, idea of the costs associated with a new baby is to ask other parents. Here are a few additional costs you can expect to incur:
- Food/formula
- Diapers, wipes
- Childcare
- Clothing
- Doctor visits, medicine
Although it may seem a long way off, you may also want to consider adding college savings to your baby budget. However, if this isn’t a realistic goal at this time, don’t let it bother you. While it’s best to start saving for college as early as possible, there will be many opportunities to do this later when you aren’t so preoccupied with a brand new baby!
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