Having a baby is a huge life event—and it comes with a lot of expenses. From buying a bigger home to stocking up on diapers and formula, there are plenty of things to budget for. And that’s not even accounting for the cost of things like childcare. So how can you prepare your finances for your new bundle of joy?
Getting ready financially
Any parent will tell you that babies are expensive. Even before the baby is born, parents may find themselves making a lot of one-time purchases like a crib, toys, or a changing table. There are also recurring expenses, like diapers, formula, and childcare. It can be helpful to start saving early for these expenses, and to have extra saved up for less predictable costs like medical bills.
Prep your home
Prepping your home can require several steps. For starters, you’ll need to decide whether you have enough space. If your home is on the small side, you may want to consider moving to a bigger place. Getting your space ready can also mean getting started on babyproofing. Of course, the baby won’t be able to move around when you first come home, but it can be helpful to get ahead of making your home safer before you’re occupied with taking care of an infant. Finally, you’ll need to set up the nursery or space where the child will sleep. This means deciding where all your new baby’s stuff will go and how you’ll arrange the space.
Think about life insurance
Many new parents decide to get life insurance to ensure financial stability for their child and partner should they die unexpectedly. Life insurance could replace a partner’s income and help pay off debts and a mortgage. New parents often opt for 20-year term life policies because it covers them until their child is an adult. It’s important to shop around and compare different policies before you decide which one is right for you. You’ll also need to decide how much coverage you need. Some factors to consider include your salary, how much debt you have, and whether you have other dependents.
Decide on Childcare
Choosing childcare is an essential step for parents returning to work. Deciding whom to leave your baby with can feel like a daunting task, but it’s important to take your time and choose the right option for your family. You’ll want to take the price into account, as childcare can be expensive, as well as how you’ll pay for it—some employers offer flexible spending accounts that allow parents to use pretax money to pay for certain childcare options. You may want to discuss your options with human resources. You’ll also want to decide on the type of childcare. Daycare is a popular option for working parents, as it can provide consistent care for your child during work hours. Another option is hiring a nanny or babysitter to come to your home. You may also want to consider asking friends or family members if they would be interested in helping out with childcare. Whatever option you choose, be sure to give yourself plenty of time to make the decision and get everything set up before your baby arrives.