Preparing to bring a child into the world is never easy, but the financial component is one of the most important things to consider, whether you are getting ready to try having a baby or waiting for it to come into the world. Statistically, the U.S. Census has shown that fewer babies have been born since 2018, but if you are about to embark on the journey, it is a good idea to get your finances in order. Here are some of our best tips on how to prepare financially for a new baby.
Adjust your budget
If you are looking to expand your family, it is a good idea to take a second look at your budget. Adjustments will need to be made, and it is important to do so before the child arrives. Speak with your partner about how things are going to change and how priorities will shift. Money that was once used for trips, clothes or entertainment may need to be focused.
Consider new items you may need to buy, and factor that into your new budget. According to the USDA, middle-income ($59,200-$107,400) parents will spend about $12,980 annually per one child, but you can calculate your personal costs through a budget calculator.
Look at your insurance
Your budget will likely require you to look at how much you will need to pay for the birthing and aftercare process out of pocket. Some of these costs are covered by certain insurance plans. If your current plan does not, you may be able to make adjustments in some cases. There are specific life events that allow this to happen, regardless of whether you are in the window of enrollment. This is called a Qualifying Life Event (QLE). One of these QLEs is known as “changes in the household,” which includes getting married or divorcing, having a baby, adopting or experiencing a death in the family.
Create an emergency fund
No one wants to think about an emergency situation, especially when it comes to having a baby. However, it is important to be financially prepared in case something unexpected happens. Obviously, the more you can save the better, but anything will make a difference during unforeseen circumstances. In the likely event that you do not have to dip into the fund, you can turn it into a nest egg for the baby.
Consider boosting your retirement contribution
As you grow your family, your retirement will become more important. The day that you stop working may seem far away but will make all the difference when the time does come. Think about starting a retirement fund or increasing your contribution to support your family in the future.
To learn more about how to tailor your budget to your new needs, reach out to The Federal Savings Bank.