Having a newborn is the biggest financial commitment you’ll ever make. As with all monetary investments, you’ll want to ensure you’re spending your money correctly. However, when you learn you’re expecting, budgeting likely isn’t the first thing on your mind. Instead, you want to celebrate the life growing inside of you and learn as much as you can about caring for this little one. Thoughts relating to financial planning for a baby usually don’t occur until the mid to end of your pregnancy. And by this point, you’ve missed out on months of vital preparation. Don’t wait till the last minute; get the boring stuff out the way and start preparing your finances for your newborn today.
Organize your maternity and paternity leave
One of the most important conversations you need to have while preparing for a newborn relates to the period you’ll have off from work. The amount of time you get off will vary between companies and states. Once you’ve announced you’re expecting, speak with your employee about the maternity or paternity leave and how much you’ll get paid during this period. This information will help you with your financial planning for your baby.
Get familiar with your finances
If thinking about finances makes you squirm, it’s time to get over this. The only thing that should be squirming is your little one. Planning for a baby financially means you need to be familiar with your ingoing, outgoings, debts, and credit score.
Spend a day or two sitting with your partner and getting to grips with your economic situation. If you have debts, see if there’s a way for you to pay these off before your newborn arrives. Equally, this is a good time to do a credit check and see if you can improve this to benefit your family’s future. Having a newborn baby might not feel like the opportune time to start saving, but it’s always helpful to have savings. If you can put money into savings (no matter how big or small), we highly recommend doing so.
Budget for your baby
Preparing for a newborn is expensive, and this doesn’t go away after you’ve made the big purchases. Hospital fees, baby monitors, and buggies are an investment. And you’ll be purchasing diapers, clothing, and formula regularly. Everything in your baby’s life adds up, and you need to be financially prepared for this.
One thing we highly recommend when planning for a baby financially is creating a budget.
Although this budget will change as your newborn grows and you adapt to parenthood (or life with a larger family), it’s a solid foundation. Consider how many diapers your newborn will likely go through and how much this will cost you. According to Healthline, newborn babies use eight to twelve diapers a
day! You won’t know the exact amount until your baby is born but using information online and available in the NBNY community, you can predict how much your newborn will cost you.
In addition to planning daily costs, consider your long-term budget. Will you create a savings account for your baby, and what percentage of your income will go in here? When you’re preparing for a newborn, you need to consider the long term and short-term costs.
Set up life insurance and your will
Financial planning for a baby isn’t all about diapers and savings accounts; you need to tackle the difficult things too. As a parent, you’re responsible for a life separate to your own, and this responsibility exists even if something were to happen to you.
Before your baby arrives, you need to make sure you have a will and life insurance. This legal documentation ensures the safety and security of your baby if something unexpected occurs.
If you and your partner need assistance with this, speak to a lawyer or financial advisor you can trust. We recommend organizing this as soon as possible so you can go on enjoying life in your newborn bubble and not have to worry once they’ve arrived.
Depending on your personality, the thought of organizing your finances might either send you crawling under your duvet or opening a shiny new excel spreadsheet. However, we’re assuming more of you relate to the former situation. Planning for a baby financially won’t be the most exciting part of your pregnancy journey, but it is one of the most important! Set aside time to get into your financial situation with your partner. Be honest with yourself about the state of your finances and create a plan that will help you navigate the financial requirements you’re about to face. Preparing as early as possible will help you feel less stressed and more in control when your newborn arrives, leaving you with time to enjoy your bouncing baby and learn as much as you can about newborn care.