Congratulations! You are having a baby!
Becoming a parent is one of life's biggest joys and responsibilities. Once you find out you are having a baby, life quickly becomes very busy with preparations and planning for your little one. Your calendar will become full with everything from scheduling medical tests to signing up for childbirth classes and picking out a car seat.
Preparation you can’t afford to avoid!
A topic that many expectant parents are reluctant to discuss with their close family, friends, professionals or even each other, is money! How in God’s name are you going to pay for another person to live in your house and eat your black olives and 12 month old Manchego?
The Cost of Having a Baby
The average child, in 2018, will cost, out of pocket, ~$3,500 to deliver … and they are not even home yet. And the cost of raising a child from birth to 18 years is somewhere in the neighborhood of $350,000! If you enjoy splurging on your kid, taking vacations, weekend trips, nice clothes and going out to eat, it can quickly add up to $700,000. Now, take a deep breath. By implementing a plan, there won’t be any need to stress over baby related finances.
If you can, get started when you decide to start a family.
Assess Your Car.
Is it safe, dependable and can it accommodate a baby? A baby doesn’t require a SUV or a minivan, a decent sized sedan will do. Every 3 years, my wife and I take turns getting a car. I like to drive them to ~160,000 miles. When “baby making” enters the family discussion, the next car purchased should take baby into consideration. (We bought a Subaru Outback 2 years before our first son was born).
Assess Your Living Situation.
Get into a housing situation that is not likely to change for 3 to 5 years. If you are renting, get something big enough to accommodate your growing family. If you have a house, make sure the location is family-friendly. If you don’t have a garage or car port, think about how you are going to feel dragging a car seat through a cold rain storm.
Have Fun with your Partner.
You may think that things are not going to change for y’all. THEY WILL. You won’t be going out for late night dinners. You won’t be catching a last minute flight down to Miami. You won’t be tailgating with your college friends on Saturday’s— or at least not very often. So enjoy your baby-free freedom while you still can. Jenn and I hit Costa Rica, Belize and Hawaii in the two years leading up to becoming parents.
I recommend $20,000. But do what you can, while having fun.
Mom-to-be may be experiencing some morning sickness and be worn out from her pregnancy, but you should still prioritize:
Start a budget for the coming 40 weeks. Plan on a weekly/monthly schedule, how you will draw down and distribute your cash.
Get a will drawn up by a trusted estate lawyer.
Complete any house projects (non-baby related), that you’ve been putting off.
Review your health insurance. It will be important to have a doctor in network, at a hospital you trust and close by. Reviewing your health coverage will give you an idea of your out of pocket costs. Also, you may determine after reviewing your coverage from a parent perspective, you may want to change providers or plan at your next open enrollment.
By now, you should know if you are having a boy or girl — or maybe you’re keeping it a surprise. Either way, you can start nesting in earnest!
Set up the nursery. Buy the bed, changing table, nursing chair, paint the walls and decorate.
Determine your maternity and paternity leave. And then talk to your boss or Human Resources. If you work at a small business, the quicker they know what is coming, the better they can prepare.
Review your company’s paid leave benefits. If that’s not an option, look into Short Term Disability benefits. Short Term Disability can cover you for a percentage of your compensation. If you are a dad, take a long hard look at paternity leave. The difference in women’s and men’s pay in the work force these days is actually statistically related to “moms” -v- men. Women with no kids, earn just as much as men. A key to potentially solving this, is having dad take paternity leave. It is a complicated topic, but worth consideration.
Borrow and bargain shop. This is something I wish I did with my first son. We wanted all new, the latest and greatest for our little one. We spent a lot and didn’t realize how quickly the first year goes by and how quickly he would grow out of things. Reach out to your network of friends, family and Facebook and see who has baby gear they're willing to sell or give to you. Cribs, changing stations, strollers and clothes for you and baby are great items to borrow.
Set up baby registry. Make sure and ask for all of the things that you really want and/or need. Check out the online lists like Amazon’s Baby Registry. It offers almost everything, and is convenient and easy for family and friends that don’t live close by. Be thoughtful about compiling your list. And also be cognizant of the size of the shower, when setting your wish list.
Finalize Child Care. Make sure day care applications are complete and starting dates are set or get a commitment from your nanny.
Stock pile baby supplies. Be savvy, get to know prices and buy diapers, wipes, food, clothes when they go on sale.
Pack your Hospital Bag: At 36 or 37 weeks, pack your hospital bag and install your baby’s car seat, just in case you go into labor early. Here’s a great list of what to pack.
Schedule a newborn photoshoot (with an affordable photographer). You’ll treasure those photos forever. **Yes, that is my son in the top pic. Isn’t he cute?
FOCUS ON BABY!!
How a Financial Planner Can Help
Becoming a parent is both exhilarating and overwhelming. You want to provide your baby with a safe, secure and loving home. Having a sound financial plan can help you provide that security for your family:
Estimating your medical costs
Planning leave from your job
Budgeting for your new arrival
Estate planning - will or trust
Life and Disability guidance