Life can change significantly right after you have a baby. Becoming a parent is an emotional journey. But with joy and happiness comes great financial responsibility. There are various problems that you may face as a new parent. So let such money woes never outshine such memorable phase of your life. You will find several ways so you can avoid money problems that new parents-to-be face. Since a child is a lifelong expense it is important to have perspective and proper planning.
Review Your Insurance
The very first step, you should take the moment you find out you are pregnant or planning to get pregnant is review your health insurance. Without proper health insurance, the expenses related to pregnancy, doctor visits, and delivery could lead to major financial woes. The method that you choose to give birth can also affect the cost. Having health insurance will save you tens of thousands of dollars during your pregnancy. Make sure you-
- Learn what is covered by health insurance
- Understand the deductible
- Get enough coverage
- Never miss a premium payment
- Be upfront about the pre-existing conditions
Prepare a Budget
It is absolutely important to make a budget. Creating a budget will help you to prepare for paying all the upcoming costs. You can choose the 50/20/30 budget method. This is a helpful budget strategy even for those who have never budgeted before. It is a simple way of dividing the spending into three groups. As per the method, 50% of your total income is to be spent on living needs, 20% on saving and 30% is for discretionary spending.
Caring for and providing for your child can get extremely costly gradually. Thus, it is important that you start saving early so that you can put money towards stuff that you will need. Some of the steps that you can do to start saving include-
- Cut out non-essentials
- Learn to cook and eat leftovers
- Install a programmable thermostat
- Buy used baby items
Plan For Childcare
Once your maternity and paternity leave is over, you need to figure out how you are going to care for your child when you are away at work. Search for childcare early as it can be tricky depending on where you live. Besides, there are several options apart from the traditional daycare, which includes in-home care, private nannies, nanny share programs, and family that will help. Do take your time ahead of making such huge decisions.
Set Up An Emergency Fund
Life is full of unpredictable circumstances. You never know when your child or any family member might fall ill. Therefore, it is very important that you create an emergency fund. The best method is to spend less and save more. Trim all your non-essential spending and pay your emergency fund monthly just like you pay for your bills.
Get Rid Of Existing Debt
Before you plan for the expenses that your growing family will face, try to get rid of your existing expenses. For that, you can use the snowball method. As per this method, you first take the smallest of your credit card debt and pay for that and pay only the minimum for your other credit card debt. Once you have paid off the smallest credit card, you can focus on the next smallest of your debts. Gradually you will be able to eliminate all your interest-bearing debt and free up your lines so that you can use your card in the event of emergencies when you do not have enough cash in hand.
Save For Your Child’s Future
Apart from all the expenses that you plan for once you find out you are pregnant, you will also need to plan for your child’s future. Starting early will save you from heavy financial burden later on. You can simply open a savings account and start by depositing a small amount every month. You need to name your child as the beneficiary of the account and decide the age at which the money can be accessed. Start saving whatever amount you can and you will thankful yourself later on.