Preparing For Your Baby Financially
Planning how to prepare for a baby financially is a very personal decision. Everyone has different financial needs. What may be the best way for one family is totally different for another. There’s no right or wrong answers to these questions, as everyone has their own unique situation and wants different things for their baby. But the best way to start preparing for a baby financially is before you even get pregnant. The key is to have a plan and try to put that plan on paper, then stick to that plan as best you can. That way, when you get pregnant, you can be stress free as you have all your ducks in a row.
Find A Financial Advisor
The first thing you want to do is talk to your financial advisor, if you have one that is. If not, no problem. This may sound like a scary word but it’s really not. Your financial advisor can give you some good advice about how to prepare for a baby and help you make the right decisions. They can give you good tips on saving for your child’s education, for your basic living expenses, and even how to plan your after birth care so that you have enough money to support yourself and your baby.
Preparing for the added costs for the pregnancy itself
Then you’ll want to budget in the expenses of child clothing, baby food, formula, diapers, everything that the child needs to survive and thrive. You may need to budget in child care as well.
All of this doesn’t have to be expensive as you can get used furniture on Craigslist or from family or friends. In fact you can even get some of these thing for free on Facebook or Nextdoor or from just asking around. And childcare can be free if you have friends or family who are willing!
Once you talk to your advisor, you need to create a budget for yourself and your family. Start with your gross income and work backwards from there. Maybe mom or dad needs to get extra work or may you need to cut back on other expenses. Having a baby is definitely expensive! But it can be done! Once you have your financial information ready, you can work out your monthly expenses to see where your money is going. It’s important to know exactly what you have coming in each month to avoid getting into trouble with paying for the “luxuries” of life while still paying your bills and preparing for your new baby financially.
Other Financial Tips
Another way to prepare for a baby financially is to plan out how much you will be taking in each pay period. You should have a budget that is well balanced between your living expenses, your retirement savings, investments, and the money you will contribute to your future insurance and pension funds. Consider on paper how much it is going to take for all your new baby expenses. It’s also a good idea to save up a small amount of cash each paycheck to go towards an emergency fund. Especially since babies are so unpredictable. If you have any unplanned expenses, put them on your budget. If you find that you have a large unplanned expense, you may be able to use the money from that one expense to pay for it.
In addition to your budget, you should also take stock of your personal assets and liabilities. You should make a list of your current assets, such as investments and retirement plans, and your current liabilities, such as credit cards, loans, mortgages, and auto payments. When you are looking at your assets and liabilities, keep in mind the total value of everything, not just the sum of the individual pieces. The value of your belongings is only important if you want to sell them and recover some money. Once you know your financial situation, you can start planning how to prepare for a baby financially.
A final step on how to prepare for a baby financially is to have a savings goal. Know how much money you can afford to spend each month and then stick to it. This will help you avoid having any emergencies, letting you go about your normal routine of paying the bills. As long as you meet your financial goals when it comes to preparing for your baby’s financial needs, you can be assured that things will be alright in the future.