In the excitement of a new baby on the way, many couples forget how important it is to think beyond the costs of nursery décor, bassinets, and those adorable onesies. While those are important, some things you may not have thought about are the actual costs of having your baby, insurance, and even your budget once baby is finally here. Don’t worry, preparing for a new baby doesn’t have to be overwhelming—at least financially.
Let’s talk about how to financially prepare for a baby so you can rest easy and enjoy every step along the way. Here are some important things to take into consideration as you get your finances ready for your new baby:
Plan for Healthcare Costs
According to Peterson-KFF Health System Tracker, the average cost of pregnancy, birth, and postpartum care is around $18,865.1 And if you have insurance, the average out of pocket costs for new parents lands around $2,854.2 Of course, those are just estimates. Your own personal health costs may be different depending on your situation. Make sure to review your healthcare insurance plan to find out exactly how much you can expect to pay once your bundle of joy arrives.
Create An Estate Plan
If you haven’t thought about creating an estate plan, now is the time! No matter how old you are, an estate plan exists to help your loved ones know what you want to do with your assets when you pass. It includes things like a will, advance directives, legacy or generational planning, and more. A will also designates your desires for your children; in the event that you pass away, you’ll need to assign caregivers and guardians for them. You’ll also designate a power of attorney if needed and beneficiary designations on your retirement accounts to make sure your family is taken care of when you’re gone.
Pad Your Emergency Fund
An emergency fund is the financial foundation that ensures you’re covered when life happens. And as we all know, life can happen unexpectedly. An emergency fund gives you the peace you need when chaos hits. Instead of worrying where that money is going to come from, you can borrow from your own savings, but don’t forget to pay yourself back later.
Debt Freedom
The art of debt free living is exactly that—an art. Sure, it can be a bit of a tough transition if you’re used to spending on credit cards, but your future self (and your family) will thank you later. Paying off your debt before baby makes his or her debut will be a huge help so you can focus on using your funds for things like wipes, diapers . . . and more diapers. If you’re serious about paying off your debt, there are plenty of helpful methods out there like the debt snowball or the debt avalanche methods to help you as you work toward debt freedom.
How to Budget for a Baby
One of the first things you can do as you financially prepare to start a family is a budget. Doing a regular budget will help you work out the kinks. Where are you spending too much? What can you cut out? Where can you save? These are great things to think about as you get ready to increase your cost of living for a new baby.
There are many different ways to prepare your budget. Download an app or just use an excel spreadsheet. No matter what you choose, just make sure you track your spending throughout the month and adjust your budget as you go.
Preparing for a new addition can be a little nerve-wracking. But it doesn’t have to be! A financial advisor can help you prepare as you enter this exciting phase of your life. Contact your SageSpring Wealth Partner and start planning today.
Opinions expressed are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James does not provided legal advice. Be sure to consult with the appropriate professional in regards to your situation.
