Budgeting for baby
If you’re planning to have a baby, you need to do more than buy maternity clothes and decorate your nursery. You will need to get your financial house in order.
Other than buying a home, raising a child is the most expensive endeavor of your life. According to the U.S. Department of Agriculture, a typical family will spend more than $165,000 raising one child to the age of 18. That’s not counting fertility treatments, adoption expenses, schools, extra-curricular activities or college.
Before your baby even arrives, they estimate that you’ll spend between $7,000 and $11,000 for prenatal care, labor and delivery. Then, first-year expenses such as baby furniture, clothes, diapers, doctor’s visits and day care will cost another $8,000 to $10,000. All of this is to say that by the time your cherub reaches its first birthday, you’ve amassed nearly $20,000 in expenses.
Knowing these statistics before going into their pregnancy might give many women pause! But take heart; there are steps you can take to mitigate these financial impacts. After all, it’s worth every penny, as the rewards of parenthood are, indeed, priceless.
First and foremost, secure health insurance coverage that makes sense for your family. The HealthCare Marketplace could be a good place to start if your modified adjusted gross income (refer to your last year’s tax return to get a good idea of this number) is around $79,000 or below for 2016. If you are covered through your workplace, take a good look at your coverage. If you have options to switch to another plan, look for a plan that covers more out-of-pocket expenses for pregnancy and delivery. It usually makes more sense to pay more in premiums to get more coverage.
Next, pay down as much debt as you can before your baby arrives. It will be much harder to attempt once your baby is born. You don’t have to pay off everything, but making a dent in your debt will alleviate stress you don’t need down the road.
It’s awfully tempting to buy every cute little outfit you see while you are pregnant, but try to resist buying more than your fast-growing baby can wear. Most seasoned moms know this after having their first baby, because the baby will outgrow them in a few weeks. Instead, ask relatives or friends for those barely used clothes after their babies grew out of them. They are likely to be as good as new. And keep in mind, newborns and first year babies don’t need a lot of shoes or toys or stuffed animals. You are better off buying and stocking up on diapers, bottles and toiletries when they are on sale.
Better yet, shop at your local small businesses that cater to new moms and babies. You’ll find exceptional selection and creativity, and you’ll likely find heirlooms that you can save for your later children.
Make more money if you can. Find a better-paying job or moonlight before your baby arrives. Maybe you can set up a home-based business to generate extra income. After your baby comes, it will not be easy to add a side job to your busy day.
If you are working and planning to take maternity leave, you will need to notify your manager a few months before you deliver so someone can be trained to fill in for you. If your company is like most, you won’t be offered a generous leave, but you should be able to take a 12-week unpaid leave under the Family and Medical Leave Act. Just remember, if it’s unpaid, this is more income to make up in the short term.
Consider child care before your baby arrives. Decide who will care for the child. If you are looking at child care outside of your home, do your homework. Every parent wants good child care, but it’s not cheap.
Some moms decide working isn’t for them after they deliver, and they want to remain home to raise their child. It’s easy to do the math on this one. Sometimes, it is, indeed, cheaper for the parent with the lower earning power to stay home instead of going back to work.
Quite a few new parents decide to get a larger apartment or house before or during their pregnancy. Since babies don’t require a lot of space in their first year, you can delay this expense, thereby saving yourself thousands of dollars for a few years, at least.
In the end, however, if you are waiting for the perfect time, the perfect job, the perfect amount of savings and the perfect home to raise a baby, you may never be ready! With a bit of preparation and thoughtfulness, you can and will enjoy the priceless gift of a baby. HLM
Sources: everydayfamily.com, babycenter.com and beingtheparent.com.