Being prepared for a new baby requires many things. Besides your personal life changing, expect your finances to also change. Knowing what to expect in advance will help you be ready for the bills, the new furniture, and your wish list for the baby registry to complete other needs. The financial preparation will probably be the biggest change. It will likely include some of the following things.
Medical Insurance
Having a baby these days is not cheap. Costs can be very high in spite of insurance coverage. You need to find out if having a baby is covered through your health insurance policy from your employer and know the limits. Most likely, you were asked if you wanted maternity coverage when you got the job or when you got married. Also, research the average delivery costs in your area and assume it will be around that much.
You also need insurance for prenatal care – which is very essential to ensure the health of the mother and the baby during pregnancy. You will also need it for delivery and a possible hospital stay for the baby or mother if there are any complications. There will be considerable out-of-pocket costs.
Prepare a Budget
Once you know a baby is on the way and you understand the basic costs, you need to prepare a budget for pre-baby expenses to ensure you have the needed money when the baby arrives. Since you likely only have about up to nine months after discovering a baby is on the way, you need to divide the expected costs by that number.
You will also need a separate budget for after the baby is born. You will need to figure the average cost of diapers, the ongoing purchase of clothes as the baby grows, doctor visits, and other things that you may not get from the baby shower. The costs of baby furniture, strollers, swings, changing tables, etc., are much cheaper if you consider buying used.
Pay Off Your Debt
If you have any debt, you should pay off as much of it as you can before the baby comes. Focus on reducing the balance owed on any credit cards that have a balance. These often have high interest, so it will put more money in your pocket if you pay them off before delivery. The interest can be considerable over a year. Pay off the lowest bill first, which will free money up to put more toward your other debt.
To reduce credit card debt faster, use cash for future purchases, and avoid putting new debt on your cards. Paying your bills on time and reducing debt will also help give you a higher credit score.
More Health Insurance
Once the baby is born, be sure to add the child to your health insurance policy. This will mean a higher cost, but remember that it often needs to be done within 30 days.
Consider Life Insurance
It is also a good idea to get life insurance for your new child. You only need enough to cover the cost of a funeral and burial.
Continue to Save for Your Emergency Fund
You can expect your child to need an emergency doctor visit on occasion. You will need to have at least $1,000 as a starting point for this fund, but you want to build it up to cover at least six months worth of income – one year’s worth is even better.
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