If youâ€™re an expecting parent, youâ€™ve probably done your homework. Between Lamaze classes, parenting blogs and the latest edition of Dr. Spockâ€™s Baby and Child Care, chances are you know enough about childbirth to get a job in a hospital. But thereâ€™s another type of preparation thatâ€™s equally important: prepare financially for a new baby. When you consider the US Department of Agricultureâ€™s statistic that a child will cost more than $245,000 by the time he or she is ready to go to college, itâ€™s easy to panic. But first things first. Here are five sensible ways to prepare your finances for the stork comes.
Get a Handle on Your Health Insurance
Even with health insurance, having a baby is expensive. Thatâ€™s why it pays to find out now what is and isnâ€™t covered by your insurance provider when it comes to prenatal care as well as labor and delivery. As a new parent, youâ€™ll want to focus your time on raising your child â€“ not on dealing with an unexpected medical bill. The sooner you know what youâ€™ll have to pay out-of-pocket, the sooner youâ€™ll be able to put that money aside.
Put Together a Pre- and Post-Delivery Budget
Once you know what youâ€™ll be spending on out-of-pocket medical costs for labor and delivery, understand how your income will be impacted in the coming months â€“ and budget accordingly. Babies come with plenty of expenses, so set a limit on both necessary and optional purchases (like that thousand-dollar Bugaboo stroller). Recurring costs such as diapers, clothing and child care will impact your spending for years to come. The earlier you budget for them, the better your chances of staying out of the red.
Ask Now About Maternity/Paternity Leave
How much time youâ€™re allowed to take off work â€“ and whether youâ€™re paid during that period â€“ can significantly impact your household finances once your bundle of joy arrives. For a clear understanding of how maternity or paternity leave will affect your bottom line, research your employerâ€™s policies as well as state laws around maternity and paternity leave. And donâ€™t be afraid to flood your HR repâ€™s inbox with questions or set up an in-person meeting for clarification. The more you know ahead of time, the less surprised youâ€™ll be â€“ and the better you can plan the time you get to spend with your newborn.Â
Start an Emergency Fund
Given the high costs of raising a child, you may not have sufficient disposable income to cover major expenses that come out of left field. But kids are accident-prone, so nowâ€™s the time to anticipate some emergencies. If you donâ€™t have an emergency fund already, start building one now. Ideally, you should have enough to cover a yearâ€™s worth of living expenses â€“ but six monthsâ€™ worth may be sufficient.
Buy Life Insurance or Buy More
Now that youâ€™re about to have a baby, you absolutely need to make sure your child and your partner (if you have one) are protected in the event that something happens to you. Term life insurance is the most affordable way to make sure your new arrival can survive without your income. SelectQuote not only offers expert advice about how much life insurance you might need but we also comparison shop a select group of highly-rated life insurance companies for your best rates. To find out more from one of our personal agents, click here or call 1-855-872-1266.