Preparing for a baby doesn’t just involve going for ultrasounds and buying cute little outfits. Although both of these things are certainly important, there’s a whole host of financial considerations you’ll need to make before your bundle of joy arrives. While you won’t be able to do everything before baby arrives, below are some of the things you can, and should, do once you find out you are expecting.
1. Understand Your Health Insurance
If you live in a country where you have to pay for health insurance, it’s important to know what will be covered under your insurance, and what you will have to pay for out-of-pocket. You will need to consider both antenatal and postnatal costs, as well as the price of the birthing options available to you.
2. Consider Life Insurance
While looking over your health insurance, it’s worth considering taking out a family insurance policy too. Life insurance will protect your spouse and your child should anything happen to you and is the best way to ensure they are financially protected. A lot of people choose to take out plans that last until their child is an adult, but you may want to look into whole-life insurance policies too if your family relies on your income or you have a lot of debts.
3. Create a Baby Budget
The cost of bringing a baby into the world can be as much as $21,000 in the first year alone, so it’s important to budget for your new arrival and consider how it will impact you financially. Take a look at your current income and see how much you have spare every month. Then, work out the costs of everything from formula and nappies to nursery furniture and child care. With both of these figures, you should be able to work out how much you can afford to spend. If you have time to pay off debts before you try for a baby, this is a good option, but there are ways to save money too, as detailed here.
4. Look Into the Cost of Childcare
If both parents need to return to work, you’ll need to look into the cost of childcare in your area. There are a lot of different options here from nurseries to childminders, all of which will vary in cost. You’ll need to determine whether one parent remaining at home will be more cost-effective, or if you have any family who can help out.
5. Build a Rainy Day Fund
If you don’t currently have a rainy day or emergency fund, now is the time to create one. Children are prone to accidents and illness, and there’s no telling how much money you may need to cover the cost of this. Even unpaid days off work need to be covered if you are working to a tight budget. Building your fund up to cover at least three months of expenses is ideal.
While bringing a new life into the world is something to treasure, it’s important to consider the cost. Babies and children aren’t cheap and those who budget in advance will be better off in the years to come.