Having a baby is expensive. And I’m not just talking about the medical expenses. You’ll need all kinds of baby supplies you didn’t before, not to mention the ongoing costs of raising kids. Once you commit to having a baby, you’re making a lifetime of financial commitments that you need to understand ahead of time. To help you get a grasp on your new financial situation, here are 5 financial tips for new parents.
1. Plan Medical Expenses
This initial expense can be a big one, especially if there ends up being unexpected complications. You’ll need to understand your coverage, so you can estimate your out-of-pocket costs. If anything is unclear, call your insurance provider and ask how much your expenses might be for prenatal care, delivery, testing, post-partum care, and things like c-sections, if the need arises.
2. Plan for Baby Needs
Diapers. Formula. Wipes. Clothing. The Stroller. Sheets. A crib. The high chair. And of course those cute little hair bows and socks. Baby needs all add up to a big budget. Diapers alone add up to an average of over $550 in the first year. Hopefully you’ll have baby showers to help offset these expenses, but be sure you’re taking this monthly budgetary hit into account.
3. College is Expensive
Yes, college costs a lot. But if you start saving NOW, your kids and your future self will thank you later. Many states have tax-advantageous college savings plans that can be really helpful.
4. Child Care
If both parents work outside the home, you’ll need to plan for the costs of child care, which can cost $1,200 monthly, even more in some areas. You’ll also want to go out occasionally and need to hire a babysitter. Research these costs in your area, and weigh the cost of daytime care against the salary you’ll make by working to see if it’s financially worthwhile.
5. Life Insurance
It’s not necessarily the most cheerful subject you could be talking about right now, but it’s important. Having life insurance is extremely important. How would you provide for your family if something happened to you? The peace of mind of having life insurance alone is worth the pretty affordable cost.