Welcoming a baby into your life is an exhilarating experience! From creating a cozy nursery to picking out adorable outfits, there’s a myriad of decisions to ponder over. One of the most significant set of decisions that you’ll need to work on pertains to your finances and how you’re going to financially secure your future when the newborn arrives. A recent survey conducted by Brookings Institution for the Wall Street Journal revealed an unsettling figure – the staggering inflation rates today indicate that parents might spend upwards of $300,000 on child-rearing till the age of 17! Sounds daunting?
Well, don’t worry, as here are six handy tips that might help you with the financial planning for your newborn baby.
PREPARING FOR THE BABY’S ARRIVAL
With a baby comes numerous expenses. So start with setting a financial perimeter for both necessary and frivolous purchases. To keep a check on your expenditure, consider purchasing second-hand items or sourcing from family or friends. Once you have a rough estimate of your medical costs and understand the likely change in your income, adjust your budget accordingly.
PLAN YOUR PARENTAL LEAVE
While some companies offer paid or semi-paid parental leave, it’s not a legal requirement. Nonetheless, you could qualify for a hiatus under the Family and Medical Leave Act, which guarantees up to 12 weeks of unpaid leave with continuation of group health insurance. If that’s not an option, focus on fattening your emergency funds.
EVALUATE YOUR HEALTH CARE PLAN
As expecting parents, you understand the significance of health insurance for prenatal care and delivery charges. After the baby comes, they will require coverage for initial pediatrician visits and any other emerging health issues.
Set aside some time to review both yours and your partner’s health insurance plans to determine which is better suited for your expanding family.
CHILD CARE PLANNING
Child care can become a hefty budget item for most families. Ensuring quality care while maintaining finances can pose significant challenges. Start planning early and reach out to day-care centers to understand their fee structure. Also, don’t shy away from leaning on family and friends for occasional babysitting to help stabilize your finances.
BUILDING AN EMERGENCY FUND
An emergency fund is a sine qua non for financial planning. It acts as a safety net during unforeseen expenditures and saves you from compromising on important financial goals. Endeavor to put away at least six months’ worth of expenses to comfortably handle unexpected costs.
SETTING UP A COLLEGE FUND
As the cost of higher education skyrockets, starting to save early can give you a significant head start. Tax-advantaged plans like a 529 education savings plan is a sound choice for college savings. Besides covering college expenses, it can also fund K-12 school costs. Remember, there are financial specialists who can guide you through this process and even help you set up an account in your child’s name.
IN CONCLUSION
Having a child can be monetarily demanding, but it’s also a jubilant milestone. Every family is unique and adopting the financial approach that best suits you is imperative. Being aware of important financial considerations can aid efficient planning. Sticking to the necessary products, looking for deals and managing your money wisely can ease the budgetary stress and help you maintain a healthy balance between day-to-day expenses and long-term investments such as your child’s education.
