Stock photo of a couple choosing paint colors for a nursery

How to prepare financially for a baby

Proper planning can help one avoid debt accumulation in relation to life changing events. One of the many preparation steps leading up to parenthood is planning for the financial changes. We’ve amassed the list below to help first time parents feel more prepared for one of life’s most financially altering events!

Pre-Baby Planning

Everyone’s ultimate goal is to have a healthy baby. But it’s also smart to prepare financially in the months leading up to the delivery.

The first step to help avoid accumulating debt that could take years to pay off, is to realize your monthly budget.

Before your baby is born, calculate how much money is coming in, how much is accounted for in reoccurring monthly expenses, and how much can be saved. With this knowledge in hand, you will be better prepared to insert the new expenses into your family budget and know how that will potentially affect other items.

Healthcare and Benefits

  • Know how much unpaid time you or your partner can take. Consider the cost of losing one or more income streams for X amount of weeks and plan accordingly.
  • Understand your health insurance and anticipated healthcare costs. Talk to your provider about an estimated cost of delivery and hospital stay to better understand your out-of-pocket expenses for the big event. Talk through payment plans with your provider.
  • It’s important to know that during any unpaid maternity or paternity leave, you may have to also pay in for health insurance costs that are normally set up to subtract automatically from your paycheck. 

Buying Baby Gear

  • Talk to other parents about which gear you could borrow instead of purchase. Some new parents borrow or buy certain baby gear second-hand to save a handful of cash. Items could include strollers, bouncy chairs, play pens, baby bathtubs, maternity sized clothing or sleeping devices.
  • Plan for additional everyday expenses within your budget. Include items such as diapers, wipes, baby bottles, extra food and daycare.
  • Be mindful of the season. How old will your baby be when the weather permits outdoor activities? Does this impact your clothing or stroller purchases? Can you delay certain purchases?

Childcare and Unexpected Costs

  • Run the numbers above. Sometimes you may even find that is makes sense for one parent to stay at home. If you and your partner both plan to keep working, start researching your childcare options before the birth. Visiting centers or interviewing nannies for daycare can take weeks of planning so we recommend getting started early!
  • Remember to keep adding to your emergency fund savings in the event some unexpected expenses arise.

If you make it through the list above, you are sure to feel more prepared for one of life’s greatest joys! Be sure to check the Great Western Bank blog for more posts like this.

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