Whether you’re only thinking about having a baby, or your due date is fast approaching, there’s no need to stress about finances. By taking the necessary measures today, you can learn to cover the new baby expenses without falling into debt. Here are some steps you can take to prepare financially for a baby.
Have a Family Focused Emergency Fund
One of the most important money moves is setting aside some cash for unexpected expenses. A solid emergency fund holds three to six months’ worth of your take-home pay. If that sounds overwhelming, start with $1,000, and shoot for one month of pay. Once you reach that target just keep going and before you know it, you’ll be at your goal.
Pay Down Debt
It’s best to get your debts in order, so that you can manage all the new expenses that come with a baby. Kids can be expensive, from the medical costs and gear to the childcare and diapers. So welcoming a newborn into the family debt-free and with money in the bank can make it a lot easier to face whatever surprises pop up.
Create A Budget with A Baby in Mind
Develop a budget that accounts for your current living expenses, plus all of those related to having a baby. Some considerations include:
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- Copays for doctors' visits
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Spend some time reviewing your monthly budget to look for ways to cut back on spending and give you that wiggle room to cover baby-related expenses.
Set Up a Baby Account
All those baby expenses can be overwhelming, but if you start saving for baby costs as soon as you plan on having a baby or find out you’re expecting, it’ll be easier to manage. Consider creating a separate savings account and setting up automatic transfers to help you build your “Baby Savings” without having to think about it. Then, when the baby arrives, you’ll be ready for the additional expenses.
Consider Saving for Your Child’s Education
Hard as it may be to believe, your little one will one day be all grown up and may want to further their education. Starting to save for your child’s schooling now will give those savings the best chance at growth. Consider opening a 529 plan before your child is born where your college savings can grow tax-free.
Create A Plan to Ensure Your Family Is Taken Care Of
No one wants to think about their own passing when preparing for a birth, but writing a will and purchasing life insurance can be the best gift for your child in case the unthinkable happens. Consider meeting with a financial professional to confirm you have adequate life insurance coverage, as well as an attorney to help you draw up a will. Then you’ll be able to rest easy knowing your family will be taken care of if you aren't around.
CāUāD members receive a discount with Hughes Law Firm, so let them provide you with the legal assistance you deserve. For any questions, give them a call 303.423.8423.
Welcoming a new baby is a life-changing experience and can mean big changes for your finances. Taking some time to evaluate your family’s financial situation may help ease a few of those new-baby worries. Follow our tips to ensure you’re financially prepared for your baby’s arrival.