Congratulations! There is a baby on the way! You’ve likely heard the statistics on the cost of raising a child and you may be wondering how you’ll afford it all. While you prepare for your little bundle of joy not only emotionally and logistically, make some preparations for the financial side of things too. Here are some pointers on how you can prepare for your baby without breaking the bank.
Analyze Your Current Finances
Before you begin saving, it’s important to analyze your current finances. You need to know exactly what you and your spouse bring in and how much you owe across the board. Take into account your total household income, rent/mortgage, car payment, insurance, utilities, groceries, property taxes, vehicle maintenance, and your debt, including other loans, credit cards, and cash advances. Note any expenses that are not a “necessity,” such as entertainment, subscriptions, eating out, etc. These should be the first thing to go when trying to give yourself enough financial wiggle room for your baby.
Eliminate as Much Debt as Possible
Try to pay extra on your monthly debt payments in the time before the baby arrives. If you still have student loans and haven’t consolidated them yet, now is the time. Not only will this help to reduce your interest rate, but you’ll also be able to apply that money to your baby once the debt has been paid off.
Increase Your Savings
The medical expenses that are coming your way may be quite hefty. If your employer offers insurance and/or some type of health savings account, find out everything you have available to ensure you are not breaking the bank every time there’s a doctor visit. Make sure that you’re putting aside money from every single paycheck. If you’re barely breaking even, it’s time to consider taking a second job or side gig, even if it’s only temporarily. This will allow you to increase your savings much quicker.
Identify One-Time Baby Expenses
Make a list of must-haves for your baby. A crib, car seat, stroller, etc. and use that list to look up prices online to determine how much you’ll have to spend. You can keep an eye on these items for the next few months and get them when they are at their lowest. You’ll likely get to cross off some items from that list at your baby shower as well, which will allow you to put the money you would spend on those items into your savings. Talk to other families, they may have hand-me-downs to pass on, which will also help you save. Baby Safety Note: Always research hand-me-downs on car seats, strollers, and cribs due to possible recalls.
Plan for Parental Leave
Discuss parental leave with your employer and spouse to determine what type of impact it will have on your finances. Is the leave paid or unpaid? If it’s paid, will it be only a percentage of your salary? It’s important to plan for this step well ahead of the baby’s arrival so you can be prepared for the decrease in income.
Better Safe Than Sorry
You’ll need to be prepared, so any extra funds that come into your household should be put aside into a savings account. The more you have saved, the better off you’ll be because you’ll be able to support your family and give your baby everything it needs.
Having a baby is an exciting time of your life, but that doesn’t mean that you should get so excited that you forget about your financial responsibilities. In fact, you’ll need to focus on those responsibilities now more than ever. Plan ahead, save and prepare yourself in every way possible. That way, when your baby comes into this world, you’ll be able to focus on enjoying them!
Need a Boost?
If you need some advice or loan help to get your cash flow more manageable, we have savings, lending, and budgeting tools that will help you and your family. Check out the Financial Wellness Center or our Personal Loan solutions. And when the baby arrives, be sure to open them a High-Yield Youth Savings account!