Preparing for parenthood can be very exciting, which can make it easy to overlook important things like your finances. And raising a child is costly, without even adding up school and college fees, family outings, and birthdays and other celebrations!
However, this doesn’t mean that you’ll spiral into debt; manage your money well and you won’t have to worry about your finances. If you’ve just welcomed a new member into your family or are expecting a baby soon, here are some essential tips that will help you make better financial choices and stay monetarily equipped for the road ahead.
Take Stock of Your Money
Taking stock of finances can never be too early, so don’t put it off until after the baby is born! Having a clear idea of how much you earn and how you spend your money will help you identify what you can afford and put aside a little for emergencies.
Start with evaluating your monthly budget- perform a cash flow analysis covering combined take-home income, fixed and variable expenses, and savings. Make sure the outgoings match the income!
List Down Expenditures
Having a baby involves a lot of unexpected expenses. To be prepared for it all, draft a pre-baby and post-delivery budget taking into account expenditures like nursery furniture, stroller, diapers, breast-milk pump, baby formula and food, etc.
Additionally, don’t forget to consider loss of or change in income and medical expenses.
Differentiate Needs from Wants
Sure, you want to give the best of everything to your baby, but fancy nursery furniture, designer baby wear, and hi-tech strollers aren’t must-haves. What’s more, your baby is neither going to notice nor care if you spent a lot of money!
So refer to your budget and check how much you can afford to spend before buying any item. Apart from a blanket, some onesies, a quality car seat, and some sturdy furniture, you needn’t splurge on much. Differentiate needs from wants and buy just the basics for your baby and yourselves, limiting high-dollar purchases to a couple of specific items.
Shopping is undoubtedly fun, especially when you’re doing it as first-time parents! Don’t let your excitement cloud your judgement though; here are some ways you can curb expenses:
- If you have a low-risk pregnancy, you might qualify for delivery at a birthing center. Check with your doctor and consider this budget option if you’re comfortable.
- Don’t buy too many clothes as your little one will outgrow them quickly.
- When buying maternity clothes, stick to buying only the essentials like leggings, maternity jeans, and a couple of tops. Buy a bump band to cover your trouser waistbands so you can wear pre-pregnancy clothes a bit longer.
- Second-hand clothes and furniture can save you a lot of money. Ensure items are in good condition before purchasing or borrowing.
- Compare prices at different stores before buying anything. Check prices on store websites too, and subscribe to store newsletters to get deals and discounts.
- Collect coupons that come in the mail and check out websites like freebies.org to avail free products.
- Sign up for rewards programs offered by major brands.
- Don’t always buy big brands; go generic for items like diapers and wipes, using the brand ones only during the night or when you’re going out.
Check the Benefits You’re Entitled To
As expecting or new parents, you could be entitled to a number of benefits. Realize that even a few extra dollars a month can make a huge difference to your budget, so keep these points in mind:
- Expecting or new parents are entitled to unpaid leaves from work, provided they meet certain criteria like having been employed at the current company for at least a year. Companies also allow parents to take paid maternity or paternity leaves, so find out what company policies are. Also, ask if you can use your sick leaves and/or vacation days.
- Learn about the various government benefits applicable in your area. Depending on your country of origin and where you stay, pregnant women and new mothers could be entitled to free dental care and prescriptions!
- New parents might also be eligible to get tax credits annually to help with the costs related to raising a child. Note that the amount of credit depends on your income, the number of children you have, and if your child has a disability.
Have Paperwork in Order
Once the baby arrives, reevaluate your existing health insurance policy and add your baby’s name to it. Depending on the plan, you could have 30-60 days to get this done. Nevertheless, get it done as soon as you can so that you don’t miss out on coverage in case your little one falls sick.
Plan for childcare at this stage and ensure you finalize the right daycare or nanny before maternity leave gets over. You might be required to complete an application and approval process, so start early.
Next, get a life insurance policy for your baby. As the costs won’t be too high, you’ll be able to fit the premium into your budget easily.
Beyond the baby’s first month, write or adjust your will. Further, designate a guardian, consider estate planning, save for college, and make preparations for your retirement.
Having a baby can be the most amazing time of your life, but if you lose sight of what’s important, you might have to spend a lot of time worrying about other things- like your finances. With the tips given here, you now know what you need to do to manage your finances. So start right away and give your baby the best that you can!