Saving for Baby
Saving tips for your newest addition
Having a baby is obviously a life changing event. For many parents it’s a joyous time welcoming their new little one into the world. However, adding to your family does come with big financial changes. On average before your little bundle of joy reaches the age of 18 you will have already spent close to $300,000 on them, and that is not even including their college education. Putting a price tag on your new baby is not ideal but parenting for the future is. The following is financial guide for your family’s newest addition.
Once you receive the good news that you and your partner are expecting, typically you will have around 10 months to start saving. Check with your employer to see how long and how much paid maternity leave they offer. Knowing this information will allow you to develop a budget for how much you may need to save. Also, take into consideration if you will be investing in child care or if you or your partner will be raising your child at home. The cost of day care can range anywhere from $4,900 - $16,000 depending on where you live. If you or your partner decide to stay at home remember your family will be only living on one income and you could lose 401(k) plan match. If either you or your partner decide to stay at home it may be a good idea to save for about 3 months of family living expenses. Also, now would be an ideal time to contact your insurer provider to get a rough estimate on how much your health and hospital bills may cost. This is a great way to help plan ahead and save for your medical expenses.
Next, you will want to develop a “baby budget”. One good financial tool is the First-Year Baby Cost Calculator, this calculator allows you to include items necessary for baby’s first year from diapers to a high chair. On average in the first twelve months expect to spend around $900 for your baby in diapers alone. A few ways to save on diapers include buying diapers in bulk and going online or looking in newspapers for coupons. Another great way to lower cost of baby expenses is to have a baby shower. By registering at various baby stores your friends can help take away some of the costs of items you many need. Also, by letting family and friends know you are opened to hand me down items like clothing and toys will greatly benefit you as well.
Lastly, get all the paper work cleared away. This include items such as life and disability insurance, LifeHappens.org is a great website to help estimate your insurance needs. Think about creating a will now that you have time, if you have not yet picked out a name for your child no worries, you are always able to come back to it. Also, now would be an ideal time for setting up your child’s 529 Plan. All 529 Plans grow tax-free and offer tax-free withdrawals for college. Finally, don’t forget once your baby is born you have 30 days to enroll him or her onto your health plan.
A budget is most likely not the first thing you have in mind when having a baby. But planning for the future is not only beneficial to you but also in the best interest for your child.