A baby’s arrival fills your heart and home with lots of joy and happiness. But, you need to be financially prepared, as it involves a lot of financial planning.
Here are a few financial moves you need to make when you’re planning or waiting to welcome a baby.
Plan A Budget Beforehand
Budgeting is the most essential thing. Financial advisors always say that you need to adjust your budget with the changes in your life and planning for a baby is an important event in your financial and conjugal life. So, even if you follow a budget, this is the time to make alterations to it to cater to the changing needs.
Don’t worry if you’re not able to do it in the first month itself. It will take some time and you’ll certainly already have enough to deal with! Try tracking your spending and continue planning a realistic budget unless you feel you have already achieved the perfect one. While planning a budget, make sure you take into consideration the pregnancy period along with the postpartum phase.
Check Out Your Health Insurance Coverage
It is always a good idea to check your health insurance policy, as having a baby is an expensive affair. Also, it’s quite natural that you’ll want the best for your baby. So, anticipate the expected as well as the unexpected costs before even planning for the pregnancy.
Choose a gynecologist and pediatrician from within your insurance network. Make a list, take references and talk to your doctor before your baby’s birth. You will obviously want the best for your child. After you choose a pediatrician, make sure you call your insurance company so that you don’t get out-of-network charges later.
And, never forget to add your baby into your health insurance policy. Usually you have 30 days to add your child; however, some of the employer-based plans may allow you to add the name within 60 days. In doing so, you’ll be assured that your baby will get the necessary treatment if required.
Start An Emergency Fund If You Don’t Have One
An emergency fund is a must especially when you’re extending your family. So, if you don’t already have one, this is the time to start a rainy day fund.
Do not use the fund unless it’s a real emergency, like any medical expense, car breakdown, etc. And, when you use this fund, try to replenish it as soon as possible.
You may ask how much will you keep in your emergency fund? It is advisable to have at least 3-6 months’ worth of your living expenses.
Plan For Maternity And Paternity Leave
When you are waiting to welcome your baby or when you’re planning for a pregnancy, make sure you check out your maternity and paternity leave policy in your respective companies. Find out how long you can take leave and whether or not you’ll be paid during that leave. This will affect your financial situation, so you’ll have to plan for it accordingly.
If you don’t get enough paid leave, you can purchase a disability insurance policy. Often the employer-sponsored short-term disability insurance policy covers birth irrespective of the different type of deliveries. However, the period for which you’ll get coverage can depend on the type of delivery.
Before thinking about this option, know that you need to purchase such a policy before getting pregnant to get the coverage.
In this regard, also know that as per FMLA (Family and Medical Leave Act), a woman should get 12 weeks of unpaid maternity leave along with protecting group health benefits, if any, if the company has at least 50 employees. However, a person can get the benefit only after working at the company for 12 months or 1,250 hours.
Set Financial Goals And Make Plans To Achieve
Do you have any financial goals? Yes? Review them and see whether or not you need to modify them. Often couples notice that their life goals change once they’re ready to welcome a baby. So, discuss your goals with your partner and plan accordingly.
It is better to reduce your expenses, because you may have to deal with sudden expenses later. Do not pile expenses now and make sure to pay your credit card bills at every billing cycle. If you’re struggling to work out your finances yourself it’s well worth seeking advice from a professional wealth management consultant. They will help you plan your finances and take into account the goals you would like to achieve.
Pay Off Debts As Fast As Possible
Debts! You will have a tough situation if you have to deal with debts later. So, try to pay off debts before you take your baby in your hands.
Choose a suitable debt repayment method as per your financial situation and the amount of debt you need to pay off. You can opt for professional debt relief solutions if you think you can’t repay debts on your own. You can choose from debt consolidation or debt settlement depending on your financial condition and the amount you owe.
Change Your Money Habits If Required
Identify the extra costs and change your money habits if you want to make your budget planning successful. So, it is better to reduce the times you eat out and identify other areas where you’re spending more.
Eating homemade food will help you save money along with providing the required nutrition to the new mother. It is also better to avoid going to a gym and take a stroll outside instead. Both of you can go for an evening stroll and enjoy nature. It will boost your mental health too.
Start Saving For Your Child’s College
It is a good idea to start saving for your child’s college once your baby is born. You will need to include that cost in your monthly and yearly budget.
You can talk to a financial advisor, if required, and start saving in a tax-favoured plan. Both you and your baby will be thankful in the future for making such a decision now. However, before you start saving, take into account the lifestyle inflation and the rising cost of education once your child will start his/her college career.
Save For Your Retirement
Retirement, another important topic to talk about. Financial advisors say that you should start saving for your retirement right from the first month you get your paycheck. Even if you have one, check out whether or not it’ll be enough once you reach your retirement age.
Just think for a moment! By planning for your retirement now, you’ll be financially independent and won’t be a burden for your baby in the future.
Purchase A Life Insurance Policy
Buying a life insurance policy will make you stress-free as you’ll be assured that your family won’t have any financial problem in your absence. The life insurance policy proceeds can also cover the cost of your children’s education. It is better to talk to an insurance agent and buy a suitable life insurance policy.
Welcoming a baby involves a lot of planning. You need to be mentally prepared and be financially able too. So, arrange your finances so that you can enjoy a stress-free life in the future.
Good Nelly is a financial writer who lives in Milwaukee, Wisconsin. She started her financial journey a long while back. Through her writings, she has helped people overcome their debt problems and has solved personal finance related queries. She has also written for some other websites/blogs like Camp Fire Finance, XRAYVSN, Diana On A Dime, Peerless Money Mentor, etc.