It’s no secret that having a family isn’t cheap. Expenses increase with each addition, and things you never thought were needed in your home suddenly become a necessity. The moment you realize you’re about to become a parent, you can start planning for the financial changes that will come with the new addition to your household.
Take a Look at Your Finances
You should look at your financial situation in two steps:
- How much more is this new life going to cost? An online calculator can help you figure out those expenses so you can create a new budget for living.
- Where will this money come from?
The actual cost of giving birth can run around $5,000 and up, while gear for the baby’s first year costs $2,700. Then, think about every year after that. There will be another mouth to feed, another body to clothe, a larger home to rent or own, education and healthcare costs, childcare, extracurricular activities, birthday presents, and school photos.
How to Save for Expenses
First, have a financial plan in place. Going for a leap of faith doesn’t always work out, and it’s not worth the risk when you have a family to support. Unless you’re already living in abundance, you should start by thinking frugally.
Don’t be afraid to let your village take care of you. If a friend or family member offers to throw you a baby shower, accept it. The gifts you receive at the shower will play a crucial part in saving you money during that first year as you’re transitioning into this new phase of supporting another life. Don’t be shy about making your list as thorough as possible. Research online, ask other moms, and think ahead about what you might need at six months or a year. If you’re only asking for newborn onesies and diapers, you’ll quickly find your child outgrowing those things.
Your friends and family want to contribute to your child’s life, so let them. Don’t be afraid to ask for hand-me-downs from friends whose children are older. If they offer to babysit, let them.
Ask yourself this question: Do I need childcare? If you don’t have the luxury of a friend or relative to watch your children, decide how childcare fits into the budget. Some parents would rather quit their jobs and stay home with the kids than pay someone else a full-time salary to watch their kids. If one parent makes close to what the nanny is being paid, then it might make more sense to stop working rather than hiring help. But if both parents want to keep their careers after the children start school, leaving a job might not be the best idea, even if the paychecks only cover the cost of hiring a nanny. There’s also the benefit of keeping your health insurance.
Look for other ways to save as well. For example, you could lower your cable bill by using streaming services instead of paying for premium channels. You could also save on your car insurance. Some insurance companies offer discounts if you group different policies together, have a car alarm or anti-theft device in your car, and are a safe driver.
Staying on top of your finances doesn’t make monetary sense only; it can improve your physical and emotional health Your overall happiness means your kids will have a happier childhood.
Finally, it’s important to plan ahead and take a hard look at estate planning, to prepare for you and your family in the event that something happens to you. In addition to getting your will in order and looking at how you want your remains handled (cremation, burial, etc.), it’s important to consider things such as life insurance. Although this isn’t a subject many new parents want to think about, life insurance can ultimately ensure that your family is cared for in the event of your passing. So, look into what type of coverage you need, the length of the policy, and how much you can afford to spend per month.
Invest in something. Investing might not be the solution for the first year of a baby’s life, but a long-term family income plan could include smart short-term investments.
Give up something. This could be the second bedroom that you’re planning to turn into the nursery. You can rent it out for the first six months of the pregnancy and then spend the last three months converting it into a nursery.
Do you need all the stuff you have accumulated? Consider selling what you no longer need. You’ll need to make room for the baby stuff anyway, so let go of items that are collecting dust.
Check your healthcare plan. With prenatal appointments, giving birth, postnatal checkups, and pediatric care, the costs add up. Make sure your insurance is the best you can get so that you’re not paying too much out of pocket every time you need to make an appointment, which will be more frequent with children.
You might consider breastfeeding as much as possible during the first year. It’s not only free; some health care professionals say it’s better for your baby.
Don’t wait until the baby comes; start your family financial plan early. Parenting comes with its own set of stresses, so reducing financial stress can make a difference in your overall happiness and prepare you to handle the new stresses that come with children.