Welcoming a bundle of joy into your life is such an exciting time. Whether you are dreaming of your future addition or are expecting one soon, it’s important to prepare for the financial impact.
1. Research Expenses
You know that children are expensive, but how expensive are they? When you begin researching your estimated expenses, it is important to do so with your partner to ensure you are on the same page with your financial goals and ideas.
Here are a few research topics to get you started:
- Work leave: What are the maternity/paternity benefits at your employer? What is the pay you can expect while you’re on leave?
- The U.S. average hovers around $3,000 with insurance. (Investopedia.com 2024)
- Insurance premium: There may be a cost to add your little one to your health insurance.
- Childcare: What does daycare/childcare cost in your area? The average U.S. family is paying $321 weekly for daycare according to Care.com.
- Baby needs: What items will you need for the baby before and after the baby arrives? You can cut costs here by buying secondhand and looking for alternatives for brand-name items.
2. Prepare Your Budget
Now that you have investigated the costs, it’s time to plug all the numbers into your budget to ensure you are prepared for the expenses. You will need a pre-baby budget for delivery and medical costs, the items to equip the nursery, and a post-baby budget for the ongoing additional expenses.
Your pre-baby budget will include things like:
- Potential unpaid work leave savings
- Delivery and medical costs
- Crib, car seat, diapers, onesies, bottles — all of the baby essentials
A post-baby budget includes:
- Insurance premium increase after adding baby
- Childcare
- Ongoing needs like diapers, wipes, formula and clothes for a growing baby
3. Plan for Your Child’s Future
While the first-year costs of having a baby can be overwhelming, it’s also important to consider a longer financial timeline. What goals do you have when saving for your child’s future? Is it a college savings plan, their first car or paying for their wedding? Whatever it is, begin saving for these long-term goals as early as possible to take advantage of the time value of money.
Prepare for your new bundle of joy by researching your expenses, preparing your budget and deciding how to plan for your child’s future! Knowing you are ready financially will reduce stress so you can enjoy this exciting time in your life!
