Having a baby is an overwhelming experience for any parent. Choosing the ideal name, scheduling newborn photos and picking the theme of the nursery are just some of the exciting activities every parent looks forward to doing. But are you financially prepared? Financial preparation is hardly about buying cute clothes, shoes or a baby colt. You need to make a solid plan on how you to cover the expenses for at least a year. Parents spend an average of £12,000 on kids’ expenses during the first year. This figure does not include the cost of giving birth, which varies, depending on the hospital, insurance plan and type of delivery you want to have. Planning eliminates stress, so you spend and enjoy the time you have with your newborn. The text explains ways parents can prepare financially when planning to have a baby.
Review Your Health Insurance
Review the plan so that it includes your new addition. If your company offers a medical cover, find out how much it allocates to maternity care. You may be required to cater to some out-of-pocket expenses when it comes to family coverage plans and childbirth. Reviewing the policy early on gives you time to save for additional costs and ask questions.
Draft a Pre-baby Budget
Once you know how much you will be spending out of pocket, assess your income to determine how it will be affected and adjust accordingly. Identify areas you can reduce spending on and increase savings. Babies introduce a lot of expenses hence, the need to set a limit on necessary and optional purchases. For example, instead of buying a designer diaper bag, buy a regular one as long as it is functional.
Set Up a Baby Account
You and your partner may decide to set up a separate account to take care of the child’s expenses. Apart from regular stuff like formula and diaper, you also need to factor in other expenses, including car seats, hiring a nanny and furniture. Having a separate savings account helps prepare for all such costs without interfering with your regular budget. Once the baby arrives, you will be adequately prepared for all such additional expenses. It is also advisable to consult Moneyfarmto get customised guidance on how you will grow and manage your finances.
Research Before Shopping
While it is fun loading up that cart with cute baby items, it is essential to research and calculate the baby items early on. Compare different buyer guides onlineand identify areas you may make significant savings. Also, consider buying secondhand items; things like a crib, rocking chair, stroller, car seat, high chair don’t need to be brand new. Social media platforms like Facebook provides an avenue where moms connect, and you can find free toys and clothes as kids outgrow such items pretty fast.
Discuss Roles with Your Partner
Balancing between childcare and work responsibilities can be tasking for working parents. As such, having that discussion with your partner helps put things into perspective. Essential things to discuss include:
- The number of leave days each of you can take when the baby arrives
- Whether you will purchase life-insurance
- Whether one of you will be a stay-at-home parent
- Whether you have friends or relatives who could help reduce childcare expenses, e.g., by offering free care