If youre an expecting parent, youve probably done your homework. Between Lamaze classes, parenting blogs and the latest edition of Dr. Spocks Baby and Child Care, chances are you know enough about childbirth to get a job in a hospital. But theres another type of preparation thats equally important: prepare financially for a new baby. When you consider the US Department of Agricultures statistic that a child will cost more than $245,000 by the time he or she is ready to go to college, its easy to panic. But first things first. Here are five sensible ways to prepare your finances before the stork comes:
- Get a handle on your health insurance. Even with health insurance, having a baby is expensive. Thats why it pays to find out now what is and isnt covered by your insurance provider when it comes to prenatal care as well as labor and delivery. As a new parent, youll want to focus your time on raising your child – not on dealing with an unexpected medical bill. The sooner you know what youll have to pay out-of-pocket, the sooner youll be able to put that money aside.
- Put together a pre- and post-delivery budget. Once you know what youll be spending on out-of-pocket medical costs for labor and delivery, understand how your income will be impacted in the coming months – 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 youre allowed to take off work – and whether youre paid during that period – 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 employers policies as well as state laws around maternity and paternity leave. And dont be afraid to flood your HR reps inbox with questions or set up an in-person meeting for clarification. The more you know ahead of time, the less surprised youll be – and the better you can plan the time you get to spend with your newborn.
- 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 nows the time to anticipate some emergencies. If you dont have an emergency fund already, start building one now. Ideally, you should have enough to cover a years worth of living expenses – but six months worth may be sufficient.
- Buy life insurance (or if you already have it, buy more). Now that youre 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.