Congratulations!!! You’re having a baby!! What now? How much will my new addition cost? What should I know now to prepare me for later? Having a baby is expensive. I think we can all agree on that. If you’re a first-time mom it’s easy to get carried away as soon as you find out the sex of your baby. You instantly want to buy everything in sight! Calm down mom, the first couple of months baby’s social life will be pretty boring. Even if you have older children, you naturally want to go out and buy little things for your new arrival. I’ll admit I did it. As soon as I found out the sex I rushed out to my now favorite stores and splurged on baby items. I assured my significant other they would be small purchases but they quickly turned in to hauls.
Many times the advice given to parents is “wait until after your baby shower before you buy baby items,” however, buying baby items is one of many things to add to your new budget. Whether you’re starting your budget during your pregnancy or after your little bundle has made his or her grand entrance, it’s never too late. There’s a lot you can do to financially prepare your family for the new addition.
Childcare
This is one of the biggest decisions you’ll have to make. Will you return to work or stay home to save money on childcare? This is obviously a very personal decision but this is also one where you may seek the advice of someone you trust on finding someone you can learn to trust with your child. Day care averages $5,000 to $17,000 a year depending on location. Yikes!!! I know. Take your time with this one. Research, talk to current parents, make impromptu visits, talk to the daycare director and employees, ask for the meal plan, how they handle incidents, illnesses, discipline, daycare closing notices (inclement weather, etc.), learning tools, security, cameras, potty training and how they communicate to the children. After all, they will be caring for your most valuable possession for 8-10 hours a day.
Credit / Savings
Now is a good time to pay down on your credit cards and start adding any extra amount to your savings. A rule of thumb is to have at least three months of expenses saved up. If there is only one income in the household, aim to have four to six months of expenses banked up. **Note, Only 16% of companies offer paid maternity leave. Want to take time off without pay? Here’s where those savings come in handy.**
Healthcare / Benefits
If you’re a regular employee, keep in mind that adding your baby to your insurance will raise your biweekly amount. Get a copy of the current rates from your employer and use that as a rough estimate to the amount that will be deducted from your paycheck. In a typical employer-sponsored health plan, prenatal care and delivery cost a patient about $3,000. Contact your insurer to see what it will cost you so that you can plan for the outlay. Also, in most cases you have 30 days after the baby’s birthday to put your child on your health plan and to sign up for flexible spending accounts that let you save pretax for health care and dependent care. Make sure you don’t miss that date!
Life Insurance
Even if you have a policy through your employer, you’ll want to have an outside policy. No offense to anyone who loves their job but your first priority is now your child. You may be loyal to your job but at any moment they can and will let you go and there goes your life insurance policy. Even if you decide not to return to work, having an outside policy will ensure your family is covered. Research whole and term life insurance and decide what’s best for you and your family. Most policies are inexpensive but be sure you fully understand what you’re signing. Ask many questions. If you’re unsure of what questions to ask, hop online and do a little research. Also, don’t just talk to one agent. Some people are only concerned about their commission. Get a second opinion (or third or fourth) to ensure you’re getting the best bang for your buck.
Use the tools at lifehappens.org to estimate your life and disability insurance needs.
Make A Will
It’s very important to appoint at least one guardian for your child. You can visit a lawyer or look for ways to do it yourself online. If you don’t know your child’s name just yet, that’s okay. You don’t need the name and you can always update it once you’ve decided on a name.
Baby Gear
Car seats, strollers, diapers, onesies, socks, pack-n-play, what to get and what not to get. Often times as a first-time parent you’ll hear “you don’t need that, you’ll never use it,” I say register for any and everything your heart desires. Have fun figuring out what you like, what your baby will appreciate, what brands you’re likely to remain loyal to and which ones you can do without. If this isn’t your first child you may have a better idea of what products and items you will definitely use so you’ll be pretty well informed in creating your baby registry. On the bright side, depending on the items, you may be able to return them, regift them or donate them. Don’t feel bad for asking for items on your registry! Have fun.
Baby Savings Plans
There’s tons of ways to save money for your baby’s future. Many parents start out saving change, holiday money, birthday money and even child support payments. Those are all great ideas and very easy to start. If you’re looking for plans that offer tax-free growth, withdrawals for college, and maybe even the option to use the money for something other than college research 529 plans and the Gerber Grow Up plan. Also check with your tax professional or state for possible deductions.
Tax Break
I am definitely not a tax expert, in fact, it can be quite confusing as your status changes. Use the Withholding Calculator at irs.gov to see if you can reduce what you’re paying to Uncle Sam each paycheck.
Figure out what other costs to expect with the First-Year Baby Costs Calculator at BabyCenter.com.
Motherhood & Money 