Babies are a big step! How do you prepare yourself and your family financially? It’s never too early, but the ideal time to start planning for adding new baby to your family is somewhere between a positive pregnancy test and posting the perfect announcement on social media.
Use these four steps from People That You Know to help you get financially ready to welcome a new member to your family.
Review Your Health Insurance
The first thing you’ll need to do is review your current health insurance plan. This will help you avoid unexpected medical costs from prenatal care to beyond the birth of your baby. The cost to have a baby varies greatly from policy to policy. It’s best to speak directly with your insurance company to get a firm understanding of what is and what is not covered under your plan.
Plan for Time-Off After Baby
Next up, you and your spouse should make a plan for maternity and/or paternity leave once the baby arrives. Reach out to a Human Resources representative at your company to learn what is offered by your employer. Much like insurance, company policies vary the length of leave they offer, whether or not it is paid or unpaid, and more.
Create a Pre-Baby Budget
Everybody knows babies cost money and they need lots of things. And new baby gadgets hit the market daily. Take time to create a pre-baby budget and outline everything you need to have before the baby arrives. Categorize items as “must-have” and “nice-to-have” to help you find ways to reduce costs. Also, talk to parents! Ask them what items they couldn’t live without or what things they never even used. Also find out which items you can purchase used versus brand new.
It’s a good idea to start creating your baby registry early. Often times, family and friends will want to purchase you a gift to celebrate your new bundle of joy. Having a registry will make it convenient for them to get you something on your pre-baby budget list.
Set Up a Baby Account
If you’re feeling overwhelmed by your pre-baby budget, open a separate savings account to help you pay for things before the baby arrives. Set up regular, automated transfers to this account. Use this money to fill up your nursery, buy a car seat, or for any other baby-related purchases.
Create an After-Baby Budget
Don’t let the term “after-baby” confuse you, this budget should be handled well before baby arrives. Consider how your income and expenses may change after the baby is born. Will mom and dad both go back to work? If so, you’ll need to budget for childcare. This budget can also help your family prepare for any recurring expenses, such as formula and diapers.
It may seem far away now, but your new bundle will be thinking about college before you know it. Don’t forget to include a savings plan for education expenses in your after-baby budget.
Want to learn more about budgeting for a new baby? Let the People That You Know help you today! For more information, contact your local Peoples Bank branch.